Crain's Chicago Business

MUSIC: Chicago’s Morton Salt site poised to become a big concert venue. PAGE 3

COVID: Experts say it’s time to ditch the “crisis mentality.” PAGE 6

CHICAGOBUSINESS.COM | FEBRUARY 28, 2022 | $3.50

FORUM

A WINDFALL FOR

INFRASTRUCTURE Chicago and Illinois are set to spend billions to upgrade roads and rails, fortify lakeside stretches and close the digital divide.

Job one is getting all the parties to collaborate. PAGE 15

JOHN R. BOEHM

FIND THE COMPLETE SERIES ONLINE ChicagoBusiness.com/CrainsForum

A former mole gets back in business

Why your next checkup could be at the Hancock The owner of the Michigan Avenue tower looks to fill vacant corporate office space with doctors and clinics

BY ALBY GALLUN Even before he walked out of the federal prison camp in Duluth, Minn., John Thomas was working on plans to start a new real estate business.

After his release in 2017, the two-time felon—best known as an FBI informant who wore a wire on a confidant of former

Gov. Rod Blagojevich—didn’t waste any time getting his company off the ground. He went on an acquisition spree that included an Aurora apartment building, an office tower in St. Paul, Minn., an Indiana shopping mall and the former Sherman Hospital in Elgin. When asked about his past, Thomas said he was a changed man worthy of a fresh start.

JOHN R. BOEHM

John Thomas, who wore a wire in the Rezko probe and served prison time, returns to real estate

John Thomas “I’ve done some shitty things in my life. I promise you I did,” Thomas says in an interview in his West Loop office. “But a lot of See THOMAS on Page 24

BY DANNY ECKER Two years into a public health crisis that has rattled the downtown office market, the owner of one of Chicago’s most recognizable office towers is turning to the health care sector for help.

In a move that charts a new path for the former John Hancock Center—now formally known as 875 North Michigan Ave-

nue—Chicago-based real estate firm Hearn is marketing several floors of the skyscraper’s 900,000 square feet of offices as medical office space, with a vision to grow that share to half or more of the building’s office block in the years ahead.

Dubbed the “Mag Mile Medical Pavilion” and situated in See HANCOCK on Page 22

NEWSPAPER l VOL. 45, NO. 9 l COPYRIGHT 2022 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

P001_CCB_20220228.indd 1

JOE CAHILL

GREG HINZ

Illinois shouldn’t cut the interest rate on its pastdue bills. PAGE 3

Are Americans ready to sacrifice to stand up to Putin? PAGE 2

2/25/22 4:28 PM

2 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

A proper response to Putin will require sacrifice

T

he pictures of destroyed buildings, plumes of smoke rising over what used to be an airport, and scared people huddling in a subway-turned-ersatz-bombshelter are bad enough. Even scarier is what Vladimir Putin had to say about causing all of that.

“No matter who tries to stand in our way or all the more so create threats for our country or our people, they must know that Russia will respond immediately, and the consequences will be such as you have never seen in your entire history,” he declared on Russian TV as his troops began invading Ukraine.

“No matter how the events unfold, we are ready.”

Are you ready, Chicago, Illinois and America? You are being threatened with nuclear war if we don’t step aside and let Putin take back Poland, the Baltic states, Romania and even a big chunk of Germany— areas that effectively were Russian colonies until the old Soviet Union

I

imploded. And maybe a little more real estate, just for kicks.

Are we ready? In a nation that can’t even agree on taking lifesaving vaccines, where some declare that being asked to wear a mask to save some else’s life is fascist, I wonder.

The situation in Ukraine clearly is not good, though anyone who knows people in Chicago’s huge Ukrainian community knows these people are not an easy pushover for anyone. They’re bravely fighting on against huge odds, and seem prepared to engage in an underground insurrection that even Russian troops will not easily overcome.

But as Ron Gidwitz, the Chicagoan who two years ago served as acting U.S. ambassador to the European Union, put it in a phone call, “We don’t have a lot of options,” with the U.S. unwilling to commit its own forces, the Germans and others wanting to keep profitable trade with Moscow going, and the

entire Western world dependent on Russian-produced crude oil and natural gas.

Ergo, as per Putin, the Russians will keep on going. Just like Adolf Hitler did in the last century, from Austria and the Sudetenland to Poland, to France, Scandinavia and more. And with him will go what’s left of the Pax Americana in which for nearly 80 years, the Cold War notwithstanding, our way of life and our rules of civilized conduct—like freedom of speech and big countries not devouring little ones—pretty much ruled.

There’s plenty of bipartisan blame as to how we got in the spot we’re in today. Ukraine was forced to give up its nuclear weapons when Bill Clinton was president. George W. Bush was busy finding Saddam Hussein’s weapons of mass destruction—or not. Barack Obama frowned, but not much more, when Putin snapped up Crimea from Ukraine.

Donald Trump shrugged off solid

GREG HINZ ON POLITICS

evidence that Putin tried to interfere in our very elections because, well, he just swoons for strong dictator types.

That was then. The question now is whether this nation can overcome that recent history and still act like the free world’s leader.

Here’s what’s on the table. We’re going to have to pay even more for gasoline and to heat the house, because income from such products is the financial fuel that keeps Putin’s war machine going. We’re going to have to spend more on defense, maybe a lot more, at least for awhile.

The additional troops and aircraft now being sent to Europe will be just the down payment.

One more thing: Kooky politi-

cians of all stripes will need to be taught the virtues of sometimes shutting up. That applies to Trump the traitor on the populist right, who just a day before the invasion labeled Putin “very savvy,” called his use of “peacekeepers” in Ukraine “genius,” and groused that, “We could use that on our southern border.”

And it applies to naive populists of the left, like U.S. Rep. Ilhan Omar, who—as Ukrainian mothers scrambled to protect their children— cautioned that any U.S. sanctions should apply only to Putin and his rich pals, lest broader sanctions harm average Russians.

Do we still have what it takes? I hope so. I wish I could say I knew so.

A talk with Illinois’ accidental legislative watchdog

llinois’ brand-spanking-new legislative watchdog, Michael McCuskey, clearly can be dubbed the accidental legislative inspector general.

While Democrats and Republicans were arguing about not acting to appoint either of their favorite job finalists, McCuskey, a former federal judge appointed by former President Bill Clinton, read the statute. It said if the office sits vacant for 45 days, its work will fall under the auspices of the state auditor general’s office. Retired and feeling more than a bit stir crazy, McCuskey called the auditor general’s office in January to offer his services and said he was told, “We’re not taking applications and I don’t know what you’re talking about.”

McCuskey, of Marshall County, north of Peoria, persuaded whomever answered the phone to pass along his interest to the powers that be. Soon, Illinois Senate President Don Harmon’s chief of staff and chief legal officer reached out and, after contentious floor debates over how he was being appointed, McCuskey now finds himself the officer charged with investigating complaints of unethical behavior in the legislative branch.

Given the office’s history, it boggles the mind that so many qualified people applied to serve.

A quick Google search reveals the office has been a seat of frustration.

It sat unoccupied for nearly four years until the #MeToo movement landed at the capitol and embarrassed lawmakers were forced to fill it. All three of McCuskey’s predecessors have outlined the ways in which the office is hamstrung by a lack of full power and independence. The prior occupant, former judge Carol Pope, called the office “a paper tiger” when she announced she was resigning last fall after lawmakers failed to approve legislative fixes. They did approve a law allowing the legislative inspec-

P002_CCB_20220228.indd 2

tor general to launch investigations without first seeking permission from the legislative ethics commission. But, Pope noted, the inspector general still has to seek approval to issue subpoenas from the four Democrats and four Republicans on the commission. Further, that commission also must vote to publish reports of wrongdoing by lawmakers. And, just as it did when trying to name a replacement for Pope, the commission frequently deadlocks. When that happens regarding a finding of wrongdoing, none of us know about that misdeed in our government.

Pope has said the most critical problem is that the jurisdictions of the legislative inspector general and the legislative ethics commission are not identical. If the legislative inspector general were to find that a violation of the Illinois Governmental Ethics Act occurred, she or he would have nowhere to take the findings to seek redress. For example, if a legislative inspector general found evidence a lawmaker committed conduct unbecoming, there is no panel empowered to impose a penalty.

Despite knowing all of this and knowing Pope personally, McCuskey placed a call, watched what he called a “spitball fight” over his nomination and now finds his way to the capitol to delve into the one complaint filed while the office again sat vacant, and whatever else might come over the remainder of his term.

“All my Republican friends, they said you don’t know what you’re getting into,” McCuskey said.

And while his predecessors were reserved and sober about the job at hand, McCuskey clearly enjoys a good chat and is relishing the work ahead.

“One, I’m bored. Two, I’m old.

Maybe I’ve got half a tank left,” he said. “This is a job I think I can make a difference by just being nonpartisan and doing my inves-

tigations. And be fair, truthful and let the chips fall where they may.”

He was unaware there is at least one piece of legislation in the mix this session to give his office more tools, House Bill 5499, which includes a provision to require that non-elected officials regularly serve on the Legislative Ethics Commission.

McCuskey said he knows the office is restricted, but he still believes he can make it work. “Each judge looks at things differently,” he said. “I’m just a straight shooter.

Follow the law, follow the facts, follow the evidence. I look at this as another public service job I can do. Every job I have, I think I’ve

MADELEINE DOUBEK ON GOVERNMENT

made a difference.”

He’s already hinted he won’t be shy about going public if he becomes frustrated.

“I don’t think that they want a former chief federal judge to hold a press conference,” he said. “I brought that up. You can’t be fourto-four forever. This job needs to work and I’m going to try to make it work.”

BE

Will the accidental appointment crash and burn?

“Maybe they think, ‘He doesn’t know how this works,’” McCuskey said. “We’ll see. I’m an optimist.

My glass is always half full.”

Madeleine Doubek is executive director of Change Illinois, a nonpartisan nonprofit that advocates for ethical and efficient government.

Let us get to know your business.

W I N T R U ST.CO M / P R I O R I T Y

GET ASSURANCE.

YO U R G E T C O M M I T M E N T.

B A N K E R’S G E T AT T E N T I O N .

TO P P R I O R I T Y Banking products provided by Wintrust Financial Corp. banks.

2/25/22 2:39 PM

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 3

JOE CAHILL ON BUSINESS

Don’t let the state backslide on bill payments

PHOTOS BY STEVE JOHNSON

A

Exterior view of the Morton Salt facility. An architectural rendering, top left, posted on an outside wall at the site gives a glimpse of what the finished product might look like.

Transformation underway at old Morton Salt facility A big new concert venue on the site, set to open in August, will help affirm Chicago’s status as a hub for indie live music BY STEVE JOHNSON

F

or decades, drivers on the Kennedy Expressway have passed the Morton Salt facility along the North Branch of the Chicago River with its “When It Rains It Pours” slogan on the roof.

Come this August, a more appropriate tagline might be, “It Rains, It Pours, It Rocks.”

The vast roofed-over warehouse where massive salt piles once sat will be transformed into a music venue, the latest venture from 16” on Center, the entertainment company behind Empty Bottle, Longman & Eagle and The Promontory in Chicago, as well as SPACE in Evanston.

Renamed The Salt Shed, the venue gets its start this summer with See SALT SHED on Page 26

“IT SEEMS LIKE THEY’VE BEATEN (LINCOLN YARDS DEVELOPER) STERLING BAY TO THE PUNCH WITH THE ENTERTAINMENT COMPLEX THERE.” Billy Helmkamp, a Chicago club owner

What’s this Mag Mile mall worth? A lot less than it was.

A California mall owner has sold its 50% stake in the Shops at North Bridge to its partner in a deal reflecting just how far the Magnificent Mile has fallen

BY ALBY GALLUN Several years after floating ambitious plans to expand the Shops at North Bridge on North Michigan Avenue, a California shopping mall owner now wants nothing to do with the place.

Macerich, a Santa Monicabased real estate investment trust, has transferred its 50% stake in the big mall to its joint venture partner in the property and has received very little in return—just $21 million. The transaction offers an unpleasant reminder of just how far the

P003_CCB_20220228.indd 3

Magnificent Mile has fallen, a decline that accelerated when the coronavirus pandemic arrived two years ago and a crime wave hit the neighborhood.

The low price for North Bridge shows that the 670,000-squarefoot property at 520 N. Michigan Ave. is worth far less today than the $515 million that Macerich and its partner, the Alaska Permanent Fund, paid for it in 2008.

It’s possible the mall’s value has dropped so much that it’s not even worth what’s owed on its mortgage, about $375 million.

The deal also represents a big

change of heart for Macerich, which was so high on the Mag Mile that it once explored a major expansion of North Bridge, one of three vertical malls on the storied shopping strip. In 2012, the REIT paid nearly $71 million for an adjacent office building, at 500 N. Michigan Ave., with plans to connect it to the mall.

Nearly three years later, Macerich and the Alaska fund paid $42 million for the entire block just south of the Nordstrom See MALL on Page 8

12% annual interest on overdue fter whittling down bills. most of its massive pile There are good reasons for of unpaid bills, Illinois this. Statutory penalty rates imwants more leeway to stiff venposed under “prompt payment” dors again. laws address power imbalances As my colleague Greg Hinz in certain transactions. For exreports, state Comptroller Susan ample, in the private sector they Mendoza just threw her support apply to large contractors that behind a bill that would slash owe money to smaller subconthe 12% annual interest rate that tractors. state agencies must pay suppliIt’s hard to imagine a more ers for bills that aren’t paid on unbalanced business relationtime. Introduced by state Sen. ship than the one between a Laura Murphy, a Des Plaines state and some of the small Democrat, the bill would cut companies that provide services the late payment penalty to on its behalf. Illinois state the greater of 3% per annum or vendors include financially twice the annual inflation rate. vulnerable service providers, Mendoza contends the such as agencies that care for 12% penalty rate is no longer the disabled and elderly. Many necessary because the state has rely heavily on state support. paid off all but $3.6 billion of Some operate on shoestring $16.7 billion in unpaid invoices budgets—a few months of unaccumulated during years of paid invoices can push them to slow-walking payments to supthe brink. During Illinois’ long pliers of various goods and serbill-paying holiday, many of vices. She also tut-tuts finance these agencies ran up debt, laid companies that profited from off workers, curtailed services the state’s financial irresponsiand closed programs. bility by acquiring unpaid debt Yet the state now wants more from state vendors and collectleeway to slow-walk payments ing the interest payments. to these agencies and other Neither argument persuades vendors. That’s a privilege unme that Illinois doesn’t need a available to most of us. Anybody severe penalty for paying bills with a mortgage, credit card or late. A 12% interest rate is a sigutility services knows all about nificant and necessary deterrent late payment fees and penalty to any backsliding. Dropping it interest rates. If consumers and would be akin to encouraging a businesses face penalties when newly sober alcoholic to hang they don’t pay bills on time, why out in bars after completing a shouldn’t the state?

30-day rehab program.

And Mendoza’s concern Yes, Mendoza and the Pritzabout finance companies ker administration deserve profiting from the state’s dilacredit for paying off so many tory practices is misplaced. If overdue bills since taking vendors choose to trade away office. Mendoza says Illinois their right to penalty interest now pays bills within 17 days for an upfront payment, that’s of receipt on average, down their business. It doesn’t cost from 210 days. Illinois has also the state any more than it would won an upgrade to its battered have if the vendor had collectcredit rating. ed the interest itself. If Illinois That’s all to the good. But it’s wants to deprive finance comeasy to meet financial oblipanies of this profit opportunity, gations when the economic snapback from coronavirus lockdowns has sent state ILLINOIS WANTS MORE LEEWAY tax revenues surging past expectations. Billions in TO STIFF VENDORS AGAIN. federal pandemic relief dolit need only pay bills on time. lars helped, too, although MenMendoza and Gov. J.B. Pritzdoza says they weren’t tapped to ker like to tout their progress in pay overdue bills. improving Illinois’ finances. But The real test will come when they have a long way to go—as the state budget is under strain the state’s massive pension again, a likely development funding shortfall shows. Bringat some point in the future. ing lasting stability to Illinois That’s when state officials will finances requires a long-term be tempted to string vendors commitment to sound practices, along again. A steep penalty including timely bill payment. rate might help keep them from The push to cut the interest straying from their newfound rate on late bill payments casts propriety. doubt on that commitment. If And it’s not as if Illinois’ late Illinois officials intend to keep payment penalty is unusual. paying state bills on time, why Other states, including neighare they trying to reduce the boring Wisconsin and Indiana, penalty for paying late? require state agencies to pay

2/25/22 3:52 PM

4 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

Icahn’s McDonald’s board fight pivots on pigs in crates The fast-food giant is facing the most high-profile attack on its animal-welfare policies as the activist investor teams up with the Humane Society

BY DEENA SHANKER AND LESLIE PATTON

used early in the sows’ pregnancies.

With Carl Icahn teaming up with the Humane Society of the United States, McDonald’s Corp. is facing the most high-profile attack on its animal-welfare policies to date.

The activist investor recently proposed two new board members for McDonald’s, escalating his demands that the company force its pork suppliers to stop keeping sows in individual pens so small they can’t lie down or turn around.

The burger chain’s board responded that it expects that, by the end of the year, 85% to 90% of its U.S. pork will come from “sows not housed in gestation crates during pregnancy.”

While that’s progress from when McDonald’s announced a move away from crated sows in May 2012, a caveat earlier in the statement specifies that the policy applies to “confirmed pregnant sows,” leaving some wiggle room for the chain and its suppliers. The animal-welfare statement on its website also says McDonald’s is guided by an industry standard that moves sows into so-called group housing after they’re confirmed as pregnant.

What’s not explicit is that sows can be crated from the time of their insemination until the pregnancies are confirmed, or about five weeks of their 16-week gestation period.

McDonald’s, which doesn’t own the pigs at issue, says it’s holding true to its decadelong pledge and that Icahn’s push to be completely crate-free is a new demand that’s currently impossible for suppliers to meet. “We disagree with this inaccurate characterization of our industry-leading pledge and sub-

‘UNNECESSARY SUFFERING’

Icahn charges that crates engender “unnecessary suffering,” justifying a push into the boardroom, and his cause is drawing support from some other investors who look at its environmental, social and governance policies. Beef, easily McDonald’s most important product, is a major source of global greenhouse-gas emissions. Restaurant workers have demanded higher wages and sued over sexual harassment and discrimination. Animal-welfare advocates want it to wield its buying power to end gestation crates, just as it helped galvanize the restaurant industry in 2015 to transition toward cage-free eggs.

“Many global investors will welcome this move,” said Jeremy Coller, chairman of FAIRR, an investor network that focuses on ESG issues in the food industry. With California and the European Union considering bans on the practice, “slow progress to phase out gestation crates is as much an investment risk as it is an animal-welfare issue.”

Kiran Aziz, head of responsible investment at Norway’s largest pension fund, Kommunal Landspensjonskasse, said last week that he considers it “appalling” that McDonald’s hasn’t fully ended the practice. “We strongly welcome this renewed attention and we strongly urge other shareholders to look into this very closely,” he said. “The welfare of livestock is rising up the ESG agenda at a rapid pace and we hope to help accelerate this.”

The pork industry has traditionally used gestation stalls to help ensure sows have been successfully inseminated, “WE DISAGREE WITH THIS keeping the pregnant INACCURATE CHARACTERIZATION OF pigs in narrow, individual stalls without enough OUR INDUSTRY-LEADING PLEDGE.” space to turn around. For 16 weeks after artificial inMcDonald’s statement semination, the sows are sequent progress we’ve seen the fed on the front end, and often have industry make at scale, including slats on the back end for their mathat an estimated 30-35% of U.S. nure to fall through. Industry reprepork production has moved to sentatives defend the practice as in group housing systems,” the com- the animal’s best interest because pany told Bloomberg News in an it allows for easier monitoring of inemailed statement. It didn’t re- dividual health.

But critics, including animal-welspond to direct questions about whether gestation crates are still fare activists and animal-health

McDonald’s, which doesn’t own the pigs at issue, says Icahn’s push to be crate-free is a new demand that’s currently impossible for suppliers to meet. experts, have long deplored these crates as cruel, citing mental and physical anguish for the animals.

GROUP HOUSING

Since 2012, the year that McDonald’s announced a goal to “source all pork for its U.S. business from producers that do not house pregnant sows in gestation stalls by the end of 2022,” the term “group housing” has increasingly shown up in conversations about alternatives to the crates.

Under a definition from the American Association of Swine Veterinarians, approved within months of the McDonald’s commitment, group housing is an environment that keeps multiple pigs living together only “after confirmed pregnant.” McDonald’s added a direct reference to this definition to its website on Jan. 27, saying, “Our commitment is guided by the industry- and American Association of Swine Veterinarians (AASV)-endorsed definition for group housing for pregnant sows.”

That’s not enough for the Humane Society of the United States, or Icahn, because that means pigs can still be crated for weeks from

artificial insemination until their pregnancies are confirmed.

“This is the very cruelty that McDonald’s promised to end and no corporate wordsmithing can change the fact that it didn’t,” said Josh Balk, the society’s vice president of farm-animal protection. “In McDonald’s so-called group-housing system, mother pigs still suffer over a quarter of each pregnancy locked inside solitary-confinement cages so tight they can’t even turn around.”

Smithfield Foods Inc., the world’s largest pork producer and one of the suppliers McDonald’s lauded in 2012 as “adopting commercially viable alternatives’’ to gestation stalls, says sows still need to be individually confined in the early weeks after insemination to keep them healthy and from being injured in squabbles with other expectant mothers — potentially jeopardizing the pregnancies. Smithfield outlined sows’ transition from crate to group housing, once their pregnancies are confirmed by ultrasound, in a 2013 video.

“What the science tells us is that animals—pregnant sows—who are housed in stalls at the beginning

of their pregnancy, they have less lesions, less injuries and they have less stress. And their pregnancies are more successful,” Stewart Leeth, Smithfield’s chief sustainability officer, said in an interview last week.

He said that unlike other producers who crate sows for the entire pregnancy, Smithfield moves them into group housing after 35 to 40 days, depending on the farm and when the pregnancies can be confirmed with ultrasound.

Critics are basing their opposition to the stalls on emotions and optics instead of the science, Leeth said.

“There are folks that will never accept what we do,’’ he said. “What we do is raise animals for food.”

Beyond McDonald’s, the rise of the group-housing system is evident as well in other companies’ statements on gestation crates.

Icahn and some ESG investors want to see more. “Until these practices are banned, it is a duty for a global and enormously wealthy corporation like McDonald’s to outlaw this with immediate effect,” said Aziz, of Norway’s KLP, which holds a total of $72 million in McDonald’s stock and bonds.

Bloomberg News

Chicago is moving to make divestment from fossil fuels permanent The city treasurer already has removed $70M in bonds

BY A.D. QUIG Chicago Treasurer Melissa Conyears-Ervin and several aldermen have introduced an ordinance to mandate that the city divest its funds from fossil fuel companies.

Conyears-Ervin had already made it office policy—the measure introduced Feb. 23 would make the change permanent.

Conyears-Ervin, who in 2019 was

P004_CCB_20220228.indd 4

sworn in, compiled an “exclusion list” of 225 companies that are coal, oil and gas reserve owners that will be barred from investment. Her office has already removed $70 million in fossil fuel-associated bonds from the city’s portfolio through “maturities or sales” in the past 18 months, she said in a release.

“When I first took office, I chose to divest from fossil fuels to protect the health of our residents, our city, and our planet. In passing this ordinance, we will be sending a message that Chicago is permanently leaving dirty energy in the past and

welcoming a clean energy future for generations to come,” Conyears-Ervin said in a release.

That $70 million sum is a small portion of the city’s overall holdings. Chicago had $8.4 billion in total assets and $646 million in cash as of Dec. 31. The bigger target would be the city’s public employee pension fund investments.

Climate change advocacy group 350 Chicago, which supports Conyears-Ervin’s measure, says it is “building support from pensioners and union members” to pressure the four Chicago pension boards to

adopt similar divestment policies, according to the group’s website.

Conyears-Ervin’s measure has the support of Mayor Lori Lightfoot. If passed, it would require the treasurer to update the fossil fuel exclusion list annually and report it to the City Council’s Committee on Finance.

Current Finance Chair Scott Waguespack, 32nd, sponsored a similar measure in 2016 to push the city’s pension funds to stop new investments and divest any direct holdings in fossil fuel companies over a five-year period. It was

introduced but never got a vote in the Finance Committee, which was at the time under the control of Ald. Ed Burke, 14th. “This policy change is even more critical now,” Waguespack said in the release.

“This is a meaningful step toward ensuring our investments reflect our values.”

Thirty-eight other American cities have already divested from fossil fuel companies, according to Conyears-Ervin. If adopted by the full City Council, she says, Chicago would be the second-largest city, behind New York, to divest.

2/25/22 2:14 PM

OK, who celebrates fifth?

Bank of America does.

For the fifth year in a row, Bank of America has shared the success of our company with our employees with a valuable Sharing Success compensation award.

To recognize the team’s hard work, this award is over and above regular compensation. And this year, we’re proud to commemorate a first — nearly all these awards are in Bank of America stock.

That means 97% of our employees shared $1 billion worth of Bank of America stock this year, above regular compensation.

“I want to thank my teammates here in Chicago for their continued hard work and dedication.

While other banks might make awards like ours every once in a while, I’m proud to work for an organization that has rewarded our employees for five years in a row.

Because success is better when it’s shared.”

Rita Sola Cook President, Bank of America Chicago

What would you like the power to do?® Learn more about how we’re investing in our local communities at bankofamerica.com/chicago

Bank of America, N.A. Member FDIC. Equal Credit Opportunity Lender © 2022 Bank of America Corporation. All rights reserved.

tab doc.indd 1

22cb0056.pdf

RunDate 2/28/22

FULL PAGE

Color: 4/C

2/17/22 5:38 PM

6 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

Why it’s the right time to lift COVID mandates Experts explain why the pandemic could soon move to an endemic phase in which we learn to live with the virus

BY KATHERINE DAVIS With COVID-19 cases down and the city and state easing restrictions, health experts say now could be the time to begin looking at the pandemic more as an endemic virus as we learn how to live with it long term.

California recently introduced a plan in which the state will treat the coronavirus as an “endemic risk.” That means shifting from a “crisis mentality” to focusing on prevention and adaptability. The plan calls for stockpiling masks, tests and other equipment, and monitoring COVID cases in wastewater, among other mitigation efforts.

California loosened its indoor mask mandate ahead of announcing its endemic risk plan. Now Chicago is next, and local health officials are beginning to explain what the city’s transition into an endemic phase might be like.

Dr. Allison Arwady, commissioner of the Chicago Department of Public Health, and Dr. Erica Taylor, medical director for congregate settings at CDPH, discussed Chicago’s dropping COVID

numbers during a Twitter Q&A on Feb. 22.

“The fact that the metrics are trending downward—that definitely gives us reassurance that we can move from a pandemic mind-state to more of an endemic mind-state,” said Taylor, adding that increasing the number of Chicagoans who are vaccinated is the quickest way to transition into an endemic phase.

Vaccinated individuals have a lower chance of developing a severe infection and dying from COVID, or passing it to others, research shows.

The CDC defines an endemic situation as “the constant presence and/or usual prevalence of a disease or infectious agent in a population within a geographic area.” Endemic diseases, which include smallpox, yellow fever and polio, are more easily managed than others, and tend to be predictable in terms of how many people they will infect.

Dr. Anthony Fauci, chief medical adviser to President Joe Biden, told the Financial Times earlier this month that the U.S. is heading out of the “full blown” pandemic.

Shape His Future. And Yours.

Genesys Works partners with leading Chicago companies, connecting them with emerging young professionals.

We provide them with training in accounting, business operations, and information technology.

You provide the entry-level internships and the exposure to the career possibilities within your organization.

Our young professionals bring their new skills, their ambition, and their work ethic.

Together, we build a pipeline of diverse, talented, and engaged workers.

Together, we change the future of Chicago’s workforce!

Learn why industry leaders partner with Genesys Works Call our Executive Director, Kim Nicholas at (312) 525-9995 180 N. Wabash Ave., Suite 600, Chicago, IL 60601 | genesysworks.org/chicago

P006_CCB_20220228.indd 6

Federal mandates still require masks for all individuals on public transportation.

He said that vaccines, treatments and prior infection would help make COVID-19 more manageable.

Chicago reported 278 new cases on Feb. 22, down 33% from the week prior, and 26 new hospitalizations, down 25% from a week earlier, according to the city’s dashboard. The positivity rate was at 1.5%, and 76% of Chicagoans had received at least one dose of the vaccine. Nearly 70% had received a second dose.

While a new variant could threaten progress made, local health experts say there’s good reason to be optimistic about COVID-19 transitioning into to an endemic phase soon.

“We were all kind of surprised by the omicron variant,” said Dr. Richard Freeman, regional chief clinical officer at Loyola Medicine.

“Otherwise, we would have already been in this endemic phase for several months.”

Even in an endemic phase, individuals should do what’s best for them based on their personal health circumstances. Like many other health officials, Freeman suggests unvaccinated and immunocompromised individuals, as well as those with underlying conditions, should still wear masks in public for the foreseeable future or talk to their doctor about their options.

“Just because it’s endemic

doesn’t mean people aren’t going to get sick and aren’t going to become severely ill and potentially die,” said Dr. John Segreti, hospital epidemiologist and medical director of infection control and prevention at Rush University Medical Center.

Even though mask restrictions are lifting in restaurants, bars and gyms on Feb. 28, federal mandates still require masks for all individuals on public transportation, in health care settings and certain congregate settings.

For employers whose workers are in an office environment, they should monitor COVID-19 cases among employees, as well as spread in the broader community, to keep employees safe, Segreti said. If cases are increasing, Segreti says employers should take steps to mitigate spread in the workplace, whether that means requiring vaccines or masks, or asking employees to work from home.

Owners of businesses like restaurants, bars and stores are advised do the same. Businesses should consider community spread, the individual circumstances of their staff and the possible risks they put patrons at when making any future vaccine or mask rules for their establishment.

“We now know that COVID-19 is not going away,” Segreti said.

“It will be here and likely be in the background at low levels for prolonged periods of time, which is the definition of endemic. Endemic means we’re learning to live with it.”

Illinois has $250 million to prevent a wave of COVID-related foreclosures As new foreclosure filings surge, the state offers up to $30,000 to help keep people in their homes

BY DENNIS RODKIN Homeowners who are still behind on mortgage payments because of COVID-related job losses may be eligible for up to $30,000 from the state housing agency toward getting caught up.

Many people who are back to work and back to paying the mortgage “are still behind a few payments because of the temporary economic hardship, and we want to keep them in their homes,” said Kristin Faust, executive director of the Illinois Housing Development Authority.

The aim, Faust said, is to prevent a new round of foreclosures like the one that followed the mid2000s housing crash, which had a catastrophic effect on some parts of the city and suburbs.

“We’ve seen before what a housing crisis does,” she said, “not just

what it does to the family, but to the block, to the community, to the city.”

The program, using $250 million in federal funds, arrives just as a new wave of foreclosures begins to surface.

Following the fall 2021 expiration of moratoriums on forelcosures, lenders’ new foreclosure starts surged in January, according to a report issued last week

by Black Knight, a mortgage data analytics company. While half the households receiving notices were already behind on the mortgage before COVID hit, about 379,000 U.S. residential mortgages remain past due, which “calls for a close watch on foreclosure metrics in coming months,” the report said.

Faust said IHDA does not have a solid estimate of how many Illinois households are eligible for the new round of assistance, but that she’s certain “there is need.” More than 16,000 had registered for information on mortgage assistance before the agency announced the program Feb. 23, she said, and mortgage data firm CoreLogic reported that in late 2021 over 41,000 Illinois mortgages were at

least 90 days delinquent.

“I think we’ll be able to make a significant contribution to assisting delinquent homeowners,” Faust said, “but we don’t know how many until people start applying.”

To qualify, homeowners must confirm they weren’t behind on payments prior to late January 2020, that they experienced a COVID-related financial setback and that they have attempted to receive assistance from their mortgage lender. All details on who qualifies and how to apply can be found at IllinoisHousingHelp.org.

In a 2020 round of mortgage assistance, the average grant was $9,800, Faust said. She expects the figure to be higher this time, if only because more time has elapsed so homeowners might have fallen farther behind on their payments.

In all its COVID-era housing assistance programs, IHDA has disbursed federal funds totaling more than $100 million in mortgage aid and $900 million in rental aid. A current round of rental aid will provide an additional $400 million to Illinois renters, Faust said.

2/25/22 2:16 PM

GETTY IMAGES

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 7

Chicago youth say mental trauma is real

Research shows the normalization of trauma and systemic inequity is worsening health and well-being

BY JON ASPLUND

Most young men of color, interviewed by their peers in a recent study, say they face mental health challenges. They also see a deep connection between systemic inequities and mental health, although they often internalize the blame, according to a report being released Feb. 21 titled “Changing the Beat of Mental Health.”

The research report was compiled primarily by the Ujima Project, a group of young men of color aged 14 to 19 from across the city, in conjunction with Ann & Robert H. Lurie Children’s Hospital and social equity organization Communities United.

Mentored in research protocols and ethics by Lurie researchers, the youths conducted 41 surveys, 11 interviews and two focus groups with their peers in which they asked a key question: “As boys and young men of color, what are the challenges we face and what are the resources we need to support our mental health and well-being?”

The conclusions they draw show that the normalization of trauma and systemic inequity is worsening mental health, the groups said in a statement.

The research also casts light on how young men of color reject the dominant, negative narrative that casts them as criminals or at least at fault for the problems in their communities.

A quote from one person surveyed sums it up: “As a kid from the South Side, people view me as stupid, dangerous, ghetto and uneducated just because of the stigmas and stereotypes that come from living in an impoverished community in Chicago. I am none of those things.”

While 62% report they have mental health challenges, the youth have found ways to cope with mental health trauma and stress during the pandemic through self-initiated outlets, such as social networking through video games and music—particularly hip hop, the study said.

In addition to talking to peers

P007_CCB_20220228.indd 7

throughout the city about trauma and mental health needs, members of Ujima had to think about their own mental well-being and the well-being of the group, said Claudio S. Rivera, assistant professor of psychiatry, behavioral sciences and pediatrics at Northwestern University Feinberg School of Medicine and a psychologist at Lurie Children’s.

One group member was killed by gun violence in the summer of 2020.

“Facing and learning about that stuff can be heavy,” Rivera said. “So we infused wellness into the process and constantly checked in on ourselves.”

In a lot of ways, the young men “heal themselves while they are healing their communities,” said Dr. John T. Walkup, head of the Pritzker Department of Psychiatry and Behavioral Health at Lurie.

Ujima member Deshawn Smith said that confronting issues of violence and mental health was hard at first, but the project gave him insight into how his peers from all over the city were dealing with the same things. They just want to be heard, without worrying about getting in trouble for sharing details of the violence and trauma they’ve seen, he said.

“Institutions need to listen to youth more, let us talk without giving us negative repercussions,” Smith said.

The experience was rewarding, he said, because they learned formal research methods, research ethics and received training and certification from Lurie Children’s Hospital researchers.

Smith, who is from the West Ridge neighborhood, is now 22 and works for Communities United. Ujima members come from the neighborhoods of Albany Park, Austin, North Lawndale, Roseland and West Ridge.

Smith said that he believes that improving access to mental health ought to begin in schools.

“I want to see things change in the schools; when I was in high school, we didn’t have anything that would help us with our mental health,” he said.

LUXURY HOME OF THE WEEK Advertising Section

5

U

T NI

S

F LE

T

MOVE-IN READY, BRAND NEW LUXURY UNITS

TOUR TODAY

312.626.0366 366 W SUPERIOR ST CHICAGO IL 60654

Don’t miss your chance to own at Superior House! Designed so that all homes are corner units, these spacious residences offer an ideal union of luxury, comfort, and privacy.

See Developer Closeout Special Pricing at SuperiorHouse.com

360–366 SUPERIOR LLC DEVELOPER LICENSE #2560442

2/25/22 2:16 PM

8 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

Marijuana industry added thousands of Illinois jobs in 2021 Continued delays in getting new dispensary licenses issued will limit growth in sales and jobs this year

BY JOHN PLETZ The Illinois marijuana industry managed to add more than 12,000 jobs last year, even though a long-awaited retail expansion remained in limbo.

Cannabis employment grew 72% to 28,992 jobs, in line with sales, which rose 73% to $1.78 billion for medical and recreational products, according to Leafly, a cannabis information website, and Whitney Economics. The continued delay in issuing licenses for 185 new dispensaries, caused by lawsuits challenging the state’s licensing process, is likely to slow growth this year. There’s no telling when the licenses will be issued, and it could

take six months to a year for licensees to get new stores open.

Leafly and Whitney Economics expect overall cannabis sales to grow 58% this year.

“Lack of access and higher prices are what is holding Illinois back,” said Beau Whitney, founder of Whitney Economics.

Growth also generally begins to slow after the first few years of a new market. Illinois started recreational sales in 2020.

Illinois has just 12 stores per million residents, according to Leafly.

Michigan, which legalized recreational use about the same time as Illinois, has 51 per million. Michigan had higher employment at 31,152 jobs and roughly equal can-

nabis sales as Illinois, even though its population is 27% lower.

“We were surprised Illinois was able to sell almost $1.8 billion last

year with only about 100 licensed stores,” said Bruce Barcott, senior editor of Leafly. “It’s all about those (185) licenses becoming

stores. The constriction in jobs and sales growth is real. A lot of people around the country are watching Illinois.”

Low sale price for Michigan Avenue mall shows accelerated decline of Mag Mile department store, the mall’s anchor tenant. Macerich pondered an addition on the vacant parcel that would have doubled the size of North Bridge—one iteration included a network of pedestrian bridges linking it to the existing mall—but the company never followed through. It also dropped its plans for 500 N. Michigan, selling the building in 2017 for about $87 million.

North Michigan Avenue has struggled since then, with its retail vacancy rate rising to 26% in 2021, up from 5.3% in 2017, according to Cushman & Wakefield.

Since the beginning of the pandemic, retailers including Macy’s, Gap and Uniqlo have closed big Mag Mile stores, and landlords aren’t finding many tenants to replace them.

Rising vacancies have a way of depressing property values. Exhibit A on North Michigan Avenue is Water Tower Place, the big vertical mall seven blocks north of North Bridge. In 2013, a UBS fund acquired a stake in Water Tower that valued the property at $810 million. In 2020, UBS sold its interest in Water Tower to its partner, Brookfield Property Partners, in a transaction that valued the property at just $394 million— down 51% in seven years.

Though the value of North Bridge has plunged, too, it’s hard to estimate how much based on what little information is publicly available. When Macerich reported its fourth-quarter earnings this month, the REIT did not disclose the sale of its stake. Macerich and Alaska Permanent Fund representatives also declined to dis-

P008_CCB_20220228.indd 8

GOOGLE

MALL from Page 3

The Shops at North Bridge at 520 N. Michigan Ave. cuss the deal.

But a brief description of the transaction appears in an information packet for a recent meeting of the Alaska fund’s board.

The disclosure—one bullet point in a 417-page document—reveals only that the fund acquired Macerich’s 50% stake in North Bridge as well as Macerich’s 50% interest in the Wabash parcel for $21 million. It includes no discussion of the property’s performance, or what it’s worth. The transaction doesn’t show up in Cook County property records either. A Macerich spokeswoman says the company will disclose it in an annual report to be filed soon with the Securities & Exchange Commission.

The price could imply that North Bridge is worth about $417 million, factoring in its roughly $375 million in debt and $42 million in total equity. But an alter-

native interpretation suggests the mall could be worth much less.

It’s plausible that the $21 million represents only the price for the Wabash parcel, which is not carrying any debt. If that’s the case, the Alaska fund paid nothing for the mall itself, possibly because the property’s value has fallen below $375 million, wiping out any equity in it. Macerich may have decided North Bridge is a lost cause and just decided to give it up.

The property’s mortgage, which does not mature until 2028, is not in default, according to the Macerich spokeswoman. A spokeswoman for Pacific Life Insurance, the mall’s lender, did not return a phone call.

Macerich’s decision to exit its North Bridge investment makes sense to Alexander Goldfarb, managing director and senior analyst at Piper Sandler in New

Whatever the value of North York. The REIT wants to focus on better-performing malls in places Bridge, it’s the Alaska Permalike Arizona, California and sub- nent Fund’s problem now. The urban Washington, he said. Ris- investment includes not only the ing crime in downtown Chicago mall itself, but also a collection may also have been a factor in the of neighboring street-level retail properties spread out over six decision, he said.

“It definitely fits within their city blocks just west of the Michnarrative of reducing urban loca- igan Avenue. In addition to Nordstrom, tenants include Eataly, tions,” Goldfarb said.

North Bridge may sound like Joe’s Seafood, Big Bowl, Kiehl’s a disastrous investment, but and Hugo Boss.

The mall has lost several retailit’s not. That’s because Macerich and its Alaskan partner—an ers, including Forever 21, which $81 billion fund that invests the closed a nearly 42,000-squarestate’s oil revenues and pays out foot store fronting Michigan Avdividends to Alaska residents— enue before the pandemic. SEC pulled a bundle of cash out of filings from Macerich show that the mall in 2016, when they re- North Bridge’s occupancy rate financed it. They borrowed $375 was 79.5% at the end of 2020, million from Pacific Life, used the latest figures provided by the some of the money to pay off an company, down from 86.3% in existing $189 million loan and 2019.

In one positive sign, the mall pocketed most of the difference.

The joint venture was able to bor- has filled prominent first-floor row so much more because the spaces recently vacated by mall’s value had risen so much Sephora, Lucky Brand and Alex & from the $515 million they paid Ani. Leap, a Chicago startup that provides brick-and-mortar store for it in 2008.

Many investors were able re- space for e-commerce brands, finance malls back in 2016, when property NORTH MICHIGAN AVENUE HAS values were still rising and lenders were still STRUGGLED SINCE 2017, WITH ITS enthusiastic about the sector. But they face a RETAIL VACANCY RATE RISING TO problem today—too much debt—amid de- 26% IN 2021, UP FROM 5.3% IN 2017. clining mall values and a wary lending community. has leased the stores—about An index of mall values complied 8,400 square feet combined—for

by California research firm Green three retailers: Frank & Oak, UnitStreet is down 35% from its peak ed By Blue and Good Life, a Leap spokesman confirmed. in 2016.

Macerich, meanwhile, now “Those malls may be overlevered,” Goldfarb said. “They may owns just one property in the Chicago area, the Fashion Outlets have little equity.”

Or they may be underwater, of Chicago, a 537,000-square-foot mall in Rosemont. with no equity whatsoever.

2/25/22 3:53 PM

ACCOUNTING / CONSULTING John Kasperek Co., Inc., Calumet City / Mokena Brandon Hursell comes to JKC as an audit and consulting Associate with five years’ experience in nonprofit, governmental and tax accounting. Mr. Hursell is adept at managing the day to day financial operations and processes of organizations. He most recently managed the full cycle of accounting activities for a nonprofit. Currently in the process of achieving his CPA, Mr. Hursell earned both his Bachelor and Master of Science Degrees in Accounting from Western Governors University.

ARCHITECTURE / LIGHTING DESIGN IA Interior Architects, Chicago IA is excited to welcome Ashley Mikels, LC, Senior Lighting Designer in Chicago. As part of IA’s lighting studio based in Los Angeles, Ashley is the first step in expanding IA’s lighting expertise geographically.

She works closely with Chicago and firmwide project teams to ensure that both natural and artificial lighting solutions are integrated into each project’s design. She is NCQLP Lighting Certified and on the Board of Managers for the Chicago Chapter of the Illuminating Engineering Society.

BANKING First Bank Chicago, Northbrook First Bank Chicago, a Division of First Bank of Highland Park, is pleased to welcome Tom Neylon to our team as Senior Vice President, Middle Market Banking. Tom will support the Bank’s expansion strategy in the Chicago marketplace, including the southwest suburbs, while developing and growing our Commercial Banking portfolio. His extensive background includes 30+ years of banking expertise and he has held senior leadership roles with First Midwest Bank and Countryside Bank (Wintrust).

BANKING / FINANCE Busey Bank, Chicago Tony Kwilosz joins Busey Bank as Senior Vice President and Commercial Relationship Manager.

With his diverse 30-plus years of Commercial and Corporate banking Kwilosz experience, Tony is a trusted advisor for new and established clients.

As a value-added partner, he offers them the appropriate services for their unique financial needs.

Busey Bank also welcomes Steve Gottesman, VP Gottesman Commercial Real Estate.

With over 10 years of experience in the banking industry, Steve’s primary focus is business development; where he works closely with real estate developers and investors seeking a relationship banking partner who can support multiple facets of their business.

P014_CCB_20220228_v1.indd 1

Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

BANKING / FINANCE

EDUCATION

FINANCIAL SERVICES

INSURANCE BROKERAGE

Lakeside Bank, Chicago

Noble Schools, Chicago

Baird, Chicago

Tim Hangsterfer joins Lakeside Bank as VP, Commercial Lending. Tim Knows Chicago. And the suburbs. In all directions.

He’s a highly successful commercial real estate lender with a construction finance specialty. And Tim Knows banking; he’s been in the business since 2002 and a leader at several financial institutions. He has a degree in Economics from Indiana University and 2005 credentials from the acclaimed Graduate School of Banking. Tim also Knows golfing, snowboarding / skiing & more. Get to Know Tim.

Mike Madden has been named President of Noble Schools after serving the organization for the past 13 years in various leadership roles, including COO for the past decade, developing and operationalizing Noble’s long-term strategic vision.

Noble is Chicago’s highest-performing and largest network of public charter schools, with 18 campuses and 1,600 employees currently serving over 12,000 students, 98% of whom are students of color, 90% low-income, and 81% first-generation college attendees.

Rodney Jones-Tyson has been named Global Chief Human Resources Officer at Baird, overseeing the firm’s Human Resources, Corporate Real Estate & Workplace Solutions, and Travel departments. A 24-year Baird veteran, Jones-Tyson was previously Chief Risk Officer. He holds an MBA from the University of Chicago Booth School of Business and a BS from the University of Maryland, and serves on the boards of IFF and the Foundation for Homan Square.

Assurance, a Marsh McLennan Agency LLC Company, Schaumburg

EDUCATION

FINANCIAL SERVICES

Noble Schools, Chicago

Hilco Global, Northbrook

Jennifer Reid Davis has been named the first Head of Strategy & Equity of Noble Schools.

Previously, as Noble’s first Chief Equity Officer, she led all strategic efforts around diversity, equity, and inclusion, including defining DEI as a core value and Noble’s commitment to anti-racism. Joining Noble in 2010, she has served as a teacher and principal at two Noble schools and founded the Diverse Leaders Fellowship, a talent pathway designed to identify their diverse pipeline of emerging leaders.

Hilco Global is pleased to announce the addition of Anthony (Tony) Tabb to the Hilco Global team, as Managing Director in the recently launched Disputes and Investigations practice of Hilco Enterprise Valuation Services. Mr. Tabb is a nationally recognized global leader in data analytic based disputes, risk advisory services, fraud investigations, financial crimes, and restitution claims management. He joins the team to develop and grow its disputes and investigations/expert witness practice.

CONSULTING HBR Consulting, Chicago Darryl Hair joins HBR Consulting as vice president of revenue operations for HBR Managed Services. He provides leadership, strategic guidance, and management direction in operations, finance, and technology to HBR Managed Services departments and their clients. Darryl brings 20+ years of experience leading operations, administration, finance, strategy, and information technology at five of the world’s largest and most prestigious law firms. Darryl holds an MBA from Columbia Business School.

EXECUTIVE SEARCH

Dr. Michael Rivas has been promoted to Executive Vice President of Risk Management Services and joins Assurance’s and MMA Midwest’s Executive Leadership Team. Rivas oversees analytics, HR consulting, HR technology, compliance, wellness and safety. Rivas provides clients with strategic support and evidence-based programs to minimize safety risks and improve employee health and wellness.

These efforts have been proven to positively impact insurance outcomes and overall company performance.

LAW Bartlit Beck LLP, Chicago Bartlit Beck LLP is pleased to announce the election of William D. Gohl as partner, effective January 1, 2022. Gohl, who joined the firm in 2018, has extensive complex litigation experience, including in areas of products liability and employment discrimination. Prior to joining Bartlit Beck, he clerked for Judge Amul R. Thapar of the U.S. Court of Appeals for the Sixth Circuit and Judge John Z. Lee of the U.S. District Court for the Northern District of Illinois.

Slayton Search Partners, Chicago DESIGN / BUILD Bridgewater Studio, Chicago Christopher Wilson joins Bridgewater Studio as Chief Creative and Operating Officer to help lead an expansion of its experience design and innovation capabilities. Bridgewater Studio is a fully integrated design and fabrication company that creates one-of-a-kind experiences for major brands, cultural institutions, retailers and more. Chris previously was at the Obama Presidential Center as Director of Planning and Design for the museum and spent 11 years at the Museum of Science and Industry.

EDUCATION Bennett Day School, Chicago Bennett Day School has appointed Kimberly Burks as Director of Intermediate and Middle School. A South Chicago native, Kim brings more than 15 years of administrative education experience at elementary and secondary schools to her role at Bennett. Kim oversees the day-to-day operations of second through seventh grade, engages with Bennett parents to manage their children’s learning experience at the school, and oversees faculty and curriculum development and implementation.

Slayton Search Partners is proud to announce the promotion of Marisa Jungels to Vice President & Principal.

Marisa joined the firm in 2013 and has helped support many successful C-level searches for clients seeking HR leaders. She will be expanding her efforts in developing impactful client relationships and recruiting key professionals in the HR space.

FINANCIAL SERVICES Hilco Global, Northbrook

NON-PROFIT

Hilco Global welcomes Linda Budz to the HCI team. Ms. Budz will serve as Director of Business Development for Hilco Commercial Industrial (HCI). In this new role she will focus on targeting transactions across critical industry sectors where the HCI team will leverage the full suite of valuation, monetization, advisory and capital solutions that HCI has to offer.

iMentor, Chicago

FINANCIAL CONSULTING The Claro Group, Chicago The Claro Group welcomes Kate Lattner as a Chicago-based Managing Director in the firm’s Disputes and Investigations practice.

Kate has substantial experience with cases involving complex accounting matters, accounting reconstruction, damages and lost profits calculations, financial reporting fraud, intricate asset tracing analyses, and insolvency and restructuring issues. Her expertise also includes U.S. regulatory investigations involving the SEC and the DOJ.

To order frames or plaques of profiles contact Lauren Melesio at lmelesio@crain.com or 212-210-0707

iMentor is pleased to announce the appointment of Nina Longino as executive director of iMentor Chicago. Nina previously served as iMentor Chicago’s managing director of program since 2018. iMentor facilitates mentoring relationships in Chicago Public Schools to ensure more students attend and graduate college. Nina has spent her career leading nonprofits, including executive director of Woodlawn Children’s Promise Community and assistant dean for multicultural affairs at Fordham University.

FINANCIAL SERVICES Self-Help Federal Credit Union, Chicago Self-Help Federal Credit Union announces the promotion of Kimberly Jones to Vice-President and Director of Community Engagement–Midwest; from Manager, Investor Relations.

Kimberly’s team will lead Self-Help’s community & investor engagement, mission deposits, and outreach strategy for Self-Help’s Seaway and Second Federal divisions in the Midwest. Kimberly has an MA, in Arts Administration from Columbia College Chicago and a BA, in Political Science from the University of Minnesota, Morris.

REAL ESTATE NAI Hiffman, Oakbrook Terrace NAI Hiffman, the region’s largest independent commercial real estate brokerage and management company, is pleased to announce the shareholder promotion of valued broker Steve Chrastka. In his 20 year career, he has built lasting relationships in leasing, repositioning, acquisition and disposition of commercial properties throughout Chicagoland. Steve leverages his expertise working with assets requiring innovative thinking and applies winning real estate strategies.

Steve joined Hiffman in 2017.

2/22/22 2:08 PM

10 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

four 9,176 the le let th to bu belo

EDITORIAL

Putting the Golden Arches Theory to the test

BLOOMBERG

I

t wasn’t long after New York Times columnist Tom Friedman posited his Golden Arches Theory of Conflict Prevention that the idea was challenged by violence in the former Yugoslavia. Friedman’s theory, a mix of sincerity and whimsical exaggeration, was that no two countries that both had a McDonald’s had fought a war against one another since each got its McDonald’s. When NATO bombed Yugoslavia shortly after Friedman’s theory was published in 1996, Friedman took it as an opportunity to argue that the economic links symbolized

by McDonald’s helped bring the conflict to a quicker conclusion.

In Friedman’s construct, Chicago’s own McDonald’s, which happened to open its first Russian outlet in 1990, is a handy stand-in for American-style capitalism, and its international expansion a metaphor for an increasingly interdependent global economy. Within this interconnected world, countries with strong economic ties—and a middle class comfortable enough to support a McDonald’s network—have too much to lose to ever go to war with one another.

The outbreak of war in Ukraine is now stretching Friedman’s theory to the breaking point. His notion is undoubtedly the least significant casualty of Russia’s aggression against its neighbor. But it does point up a problem that faces not

only McDonald’s but other major corporate players here in Chicago and beyond: How to respond when the government of a nation where one does business violates international law and abuses the human rights of its citizens?

As Crain’s columnist Joe Cahill pointed out just prior to Russia’s invasion of Ukraine, there was a time when Western politicians and business leaders comforted themselves with the notion that economic engagement with dictatorial regimes would lead those regimes to embrace Western-style civil liberties.

That argument has been undermined in recent years by rising repression in China, the former Soviet bloc and other places where U.S. companies are doing business now.

The Russian attack on Ukraine is forcing corporate Chicago to confront some tough questions, as McDonald’s as well as international players as wide-ranging as Mondelez, Abbott Laboratories, Archer Daniels Midland, Motorola Solutions, Leo Burnett, Caterpillar and others assess whether it’s safe to keep their employees operating in what’s turned into a war

zone and, more troubling, whether an American company can stand for the values of its home country in a place where those values are entirely rejected.

“They need to be questioning on a moral level and long-term reputation level what relationship they want with Vladimir Putin, now that they’ve seen what the government is capable of and the kind of global insecurity they’ve created,” Cécile Shea, a nonresident senior fellow at the Chicago Council on Global Affairs, told Crain’s in the aftermath of the Russian invasion.

There are no easy answers. There is also no undoing the ties that bind American companies to countries such as Russia and China. If the presence of American corporations can’t outright deter war or magically convert entire societies into beacons of liberty, perhaps it’s still reasonable to hope that they and their leaders can wield some sort of influence in the regions where they operate by treating their employees with respect, dealing with their business partners fairly, and encouraging those who govern to do so with justice and a sense of common decency.

With corporate global expansion come great rewards—and, as we are now being reminded, great risks. For many Chicago companies, it seems it is a lesson to be learned over and over again.

CHIC

Th to sto gene valua er, it pete outse M with ceive cost ever,

Chie

Grou

Edito

Crea

Direc Eliza

Assis

Assis

Assis Cassa

Depu

Depu and

Digit

Asso

Copy

Copy

Cont

Polit

Senio Steve

YOUR VIEW

Should Chicago consider more public-private partnerships? years, both to private investThink the $1 trillion inframent consortia. structure bill solves our infraEach transaction awarded structure needs? Consider the was based solely on a competAmerican Society of Civil Enitive bid by an investor to pay gineers’ 2021 “Report Card,” to the city the highest upfront which states it will take $2.6 rent payment to lease each trillion just to repair and reasset. Chicago was paid $1.83 place our existing roads, bridgbillion for the Skyway, $563 es and ports. The huge need for million for its parking garages new infrastructure dollars conand $1.15 billion for the parktinues unabated. ing meters.

Public-private partnerships Dana Levenson The result was $3.5 billion sound like a panacea to our in- was Chicago’s chief frastructure funding challeng- financial officer from in total proceeds from which $700 million in outstanding es. A subset of such partner- 2004 to 2007, when ships, also a potential panacea, he oversaw the long- debt that originally financed those assets was repaid. Chiincludes the more pejorative term leases of the “monetizing,” “long-term leas- Chicago Skyway and cago’s first long-term rainy-day ing,” “privatizing” and “sell- garages below Grant reserve fund came from the Skyway and parking meter proing” municipal assets. Over a and Millennium ceeds; that $800-million-plus decade ago, Chicago led the parks. Most recentaccount remains intact today, world in privatizing munici- ly, he was CEO of a pal-owned assets under the Massachusetts health and the bond ratings agencies look to this reserve to shore up aegis of public-private partner- care/hospitality ships. company. He and his Chicago’s critical debt ratings.

All three assets continue to In 2005, the Chicago Skyway wife moved back to operate well for drivers using was leased for 99 years to an Chicago last year. these assets. Given the passage Australian-Spanish consortium. In 2006, the four parking garages of time, however, it’s worth re-examining the below Millennium and Grant parks were deals to determine if they were good or bad leased for 99 years, and in 2009, down- for Chicago, and whether Chicago should town parking meters were leased for 75 explore a similar option with other assets.

Judging transactions monolithically— was it a good or bad deal?—is oversimplification. Rather, they need to be considered for: 1) the relative magnitude of the valuation paid by the lessee; 2) whether the use of proceeds by the lessor was appropriate; and 3) how well the deal was executed when the asset moved from the public to the private side. If the transactions were graded, the Skyway would get a A, B and A; the Parking Garages would get three As; and the parking meters would get an A, B and C- (all respectively).

Since Chicago’s foray, privatizing municipal assets in the U.S. has become commonplace. Other transactions include the long-term lease of the Indiana Toll Road, for which $3.8 billion was paid to Indiana in 2006; toll road leases in Puerto Rico for $1.1 billion in 2010; Seagirt Marine Terminal in Baltimore for $334 million in 2010; Ohio State University’s parking assets for $535 million in 2012; the water and wastewater system in Bayonne, N.J., for $173 million in 2012; Puerto Rico’s Luis Munoz Marin International Airport for $1.2 billion in 2013; and Pennsylvania’s Lehigh County water and sewer assets for $220 million in 2013. All privatized. And all continue to work well for the users of these assets.

Let’s take a look at each of Chicago’s privatizations:

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 150 N. Michigan Ave., Chicago, IL 60601, or email us at letters@chicagobusiness.com. Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes.

P010-P011_CCB_20220228.indd 10

CHICAGO SKYWAY

The $1.83 billion paid to Chicago in 2005 represented an unheard of multiple of 50 times earnings. Perhaps wildly high, but the lease changed hands in 2016 reportedly for $2.8 billion. Skyway tolls have gone up gradually, as per the original lease agreement, as tolls have risen across the country. In 2005, the cost to drive the Skyway was $2 and the Robert F. Kennedy (Triborough) Bridge in Manhattan was $3.50; today, these tolls are $5.36 and $8.36, respectively. Yes, part of the upfront lease proceeds went to subsidize Chicago’s operating budget, but the transition from public to private operation was seamless. Also, when the Skyway is returned to Chicago in 2104—in pristine condition as required by the lease—its value, given even nominal inflation, should be well north of $10 billion.

Repo Elyss Ally M Steve

Cont

Rese Vice

Sales

Direc

Even

Chris

Mark

Prod

Even

Acco Claud Cour

Peop

Proje

Digit

CRAI

Keith

Mary

KC Cr

CHICAGO PARKING GARAGES

At more than $61,000 per parking space paid to the city, it’s difficult to argue with the valuation. Further, none of the proceeds was used for the city’s operating budget, and the transition from public to private ownership was perfect. No one could foresee, however, the recent pandemic-induced downturn in driving when the deal was struck in 2006.

A recent rumor was the utilization of these

Sound off: Send a column for the Opinion page to editor@ chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

2/25/22 2:34 PM

Chris

Robe

Veeb

G.D. C Mrs.

For s conc chica (in th (all o

-

-

e

o

n

?

5 0 e or das 5, e n e e e nas d as n of

e e as e p r, n 6. e

YOUR VIEW Continued four parking garages was way below their 9,176 spaces. That risk, however, accrued to the lessee, not the city of Chicago. Rather than let the lease run out 2105, Chicago could offer to buy back the asset—at a price significantly below the $563 million it was paid.

CHICAGO PARKING METERS

This deal caused Chicago privatizations to stop, though not because of the extremely generous $1.15 billion, or $31,900 per meter, valuation the city got the market to pay. Rather, it was the private side’s massively incompetent operation of the parking meters at the outset.

Meters with higher prices were jammed with quarters and broke, yet parkers still received tickets. It was the immediate increased cost to park that truly frosted drivers. However, the cost to park at a meter in other big

cities, such as Boston or Midtown Manhattan, has also gone up precipitously. And remember, the desire by Chicago aldermen to increase the cost of metered parking prior to the 2009 lease was nil. Another knock on the deal was the portion of the upfront money paid to the city that was used to balance the city’s operating budget in the aftermath of the Great Recession. Frankly, though, it was either that or raise property taxes.

NEXT ASSETS

Two leasable assets in Chicago’s portfolio for big upfront payments are Midway Airport and the water and wastewater system. Let’s not attempt the latter; even a slight mishap could be disastrous.

A lease on Midway was attempted in 2008, but the global financial crisis made it impossible for the lessee to come up with financing.

The city expected to net close to $1 billion after expenses. During the intervening years, though, Midway has issued more debt that if a new deal were broached, net proceeds would be less than $1 billion. That’s conventional opinion.

With air travel returning to pre-pandemic levels, the value of Midway could be far higher, and net proceeds considerably more. Proceeds could go toward a new Soldier Field or to shore up Chicago’s underfunded pensions, to add to the rainy-day fund or to retire some city debt and reduce the taxes funding it.

The key to successful transactions is using the proceeds appropriately—not for the lessor’s operating budget, but for investing in other capital assets. Any deal has to be carefully defined so the transition of the asset from the public to the private side is without any dislocation for the users of the asset.

FLICKR/BENJAMIN LIPSMAN

t

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 11

CRAIN’S CHICAGO BUSINESS

Chief executive officer KC Crain Group publisher/executive editor Jim Kirk Editor Ann Dwyer Creative director Thomas J. Linden

...

Director of audience and engagement Elizabeth Couch Assistant managing editor/columnist Joe Cahill Assistant managing editor/digital Ann R. Weiler Assistant managing editor/news features Cassandra West Deputy digital editor Todd J. Behme Deputy digital editor/audience and social media Robert Garcia Digital design editor Jason McGregor Associate creative director Karen Freese Zane Copy chief Scott Williams Copy editor Tanya Meyer Contributing editor Jan Parr Political columnist Greg Hinz Senior reporters Steve Daniels, Alby Gallun, John Pletz Reporters Elyssa Cherney, Katherine Davis, Danny Ecker, Ally Marotti, A.D. Quig, Dennis Rodkin, Steven R. Strahler Contributing photographer John R. Boehm Researcher Sophie H. Rodgers Vice president, product Kevin Skaggs Sales director Sarah Chow Director of research Frank Sennett Events manager/account executive Christine Rozmanich Marketing manager Cody Smith Production manager David Adair Events specialist Kaari Kafer Account executives Claudia Hippel, Bridget Sevcik, Laura Warren, Courtney Rush, Amy Skarnulis People on the Move manager Debora Stein Project manager Joanna Metzger Digital designer Christine Balch CRAIN COMMUNICATIONS INC. Keith E. Crain Chairman Mary Kay Crain Vice chairman KC Crain Chief executive officer Chris Crain Senior executive vice president

Savannah College of Art & Design Forty Residence Hall Atlanta, Georgia

Robert Recchia Chief financial officer Veebha Mehta Chief marketing officer G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) For subscription information and delivery concerns please email customerservice@ chicagobusiness.com or call 877-812-1590 (in the U.S. and Canada) or 313-446-0450 (all other locations).

We see our work through the eyes of the people who will use them every day. Through their eyes, we see places of innovation, industry, technology, healing, research and entertainment.

The result? Powerful structures with impacts that reach far beyond these walls.

claycorp.com

cation

P010-P011_CCB_20220228.indd 11

2/25/22 2:34 PM

12 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

Motorola Solutions looks to shed about a third of its HQ The company has joined the downtown office tenants looking to cut back on space as the pandemic lingers

BY DANNY ECKER Motorola Solutions is looking to shrink the footprint of its headquarters by 30%, joining the pool of companies downtown trying to cut back on workspace as the COVID-19 pandemic lingers.

The telecommunications equipment company is offering nearly 54,000 square feet for sublease at its 500 W. Monroe St. headquarters, according to a marketing flyer for the space. The space is on two of Motorola’s seven floors in the high-rise portion of the 44-story West Loop building.

The listing is another sign that the office-shedding trend that has defined much of the public health crisis isn’t over. Many companies have sought to offload portions of their workspace on the secondary market after adapting to the rise of remote work over the past two years, helping push the downtown office vacancy rate to an all-time high late last year.

Earlier this month, there was 5.9 million square feet of office space available for sublease in the central business district, or almost 83% more than there was when the pandemic began, according to data from brokerage CBRE. The growth of sublease avail-

ability slowed dramatically throughout 2021, with some companies pulling their offerings off the market as they prepared for more workers to return to offices on a regular basis. Several companies have also found takers for their sublease space as other tenants have prioritized move-in ready workspace they could get at a bargain price. In one recent case, marketing software company Braze subleased 50,000 square feet at 1 N. State St. from another software firm, Showpad.

But Motorola’s listing and other recent additions to the sublease market signal that more secondary market listings could be coming as more companies gain conviction in how much space they will need as the pandemic subsides.

It’s unclear what prompted Motorola’s listing, and spokesmen for the company did not respond to requests for comment. The company announced in 2015 that it would move its headquarters and hundreds of workers to the West Loop from Schaumburg, one of a flurry of suburban companies relocating their home offices to the city to help them compete for urban-dwelling, tech-savvy talent.

Motorola said at the time it would have about 1,100 employ-

Motorola Solutions occupies seven floors in the high-rise portion of the 44-story building at 500 W. Monroe St., center.

Gibsons near deal in Fulton Market

P012_CCB_20220228.indd 12

spokesman couldn’t be reached.

Those additions to the market come a couple of months after law firm Schiff Hardin and Peoples Gas added more than 150,000 square feet combined with sublease offerings in Willis Tower and the Aon Center, respectively.

Such listings in top-tier buildings pose formidable competition for downtown landlords, many of whom have been boosting incentives like free rent, lease term flexibility and extra cash for office build-outs to entice companies to sign new leases amid the uncertainty of the crisis.

Pete Delneky, James Whelan and Todd Lippman in the Chicago office of CBRE are marketing the Motorola Solutions space.

Wintrust pumping $50 million more into venture capital Bank to double equity investments in early-stage firms PROVIDED BY FULTON ST. COS.

BY STEVE DANIELS

BY ALLY MAROTTI Gibsons Restaurant Group is nearing a deal to open a location in the Fulton Market district, a neighborhood that has remained red-hot for commercial real estate deals throughout the pandemic.

The Chicago restaurant operator is looking to lease about 15,000 square feet in a yet-to-be-constructed building at 917 W. Fulton Market, said Alex Najem, co-founder of real estate developer Fulton Street Cos. The building will likely be completed in 2024, with the restaurant opening that spring, Najem said.

Gibsons is a Chicago staple, and Najem said he’s always wanted to bring the brand to Fulton Market.

“We wanted to bring more history to the meatpacking district, and they have that reputation,” Najem said.

Topgolf venue that is anchoring a mixed-use redevelopment of 225 acres on Motorola’s former campus.

Motorola’s lease at its West Loop headquarters building runs through June 2031, according to a flyer from CBRE, which is marketing the space on the 38th and 39th floors for sublease.

Other companies have also hit the market this month with new sublease offerings. HomeAdvisor recently began marketing its 31,000-square-foot office at the Merchandise Mart, according to real estate information company CoStar Group. Other new listings hit the market at 141 W. Jackson Blvd., 125 S. Wacker Drive and at 1330 W. Fulton St. A HomeAdvisor

ees downtown, while another 1,600 would remain in Schaumburg. The owner of Motorola’s two-building office complex at 2000 and 2100 Progress Parkway in the northwest suburb put the properties up for sale in 2020, noting in a marketing flyer at the time that Motorola had nearly 1,400 employees based at that location.

Motorola has made a major commitment to Schaumburg, spending $61 million upgrading its buildings in 2016 and 2017 and reaching a 22-year redevelopment agreement with the village of Schaumburg that gives the company incentives to keep workers there long term, according to the marketing flyer. The 2000 Progress Parkway building is adjacent to a

A rendering of 917 W. Fulton Market.

“We just think it adds to the neighborhood.”

Gibsons owns or operates more than a dozen restaurants, including Gibsons Bar and Steakhouse in the Gold Coast, plus Hugo’s Frog Bar & Fish House.

Najem said the Fulton Market location will likely have more of a barand-grill vibe.

Gibsons Chairman Steve Lombardo III declined to disclose details of the potential deal, but said the group has been eyeing properties in Fulton Market for years.

“Fulton Market’s been an upand-coming area, and now it has … up and come,” he said. “We’ve

had bids out on properties, we’ve tried to buy real estate, we’ve tried to lease real estate, we’ve just never been able to.”

A lease has not been signed, and the deal could fall through.

Construction is set to begin on the 600,000-square-foot building this summer, Najem said. The 11-story building is a mix of new construction and an existing loft building.

Fulton Street Cos. plans to connect the two structures, to house a mix of retailers and office space.

The company is negotiating with an anchor office tenant for 140,000 square feet, Najem said, but he declined to disclose details.

Wintrust Financial is doubling down on its unusual venture-capital arm.

The Rosemont-based bank is committing $50 million more to Wintrust Ventures, a unit set up seven years ago to serve Chicago’s startup scene. It’s already invested about that much in 42 companies, most of them located in the Chicago area.

There are many banks serving early-stage companies, but most outside of a few specialist lenders, like Silicon Valley Bank, limit their financing to debt rather than equity. Wintrust decided in 2015 to see how equity investing would work alongside conventional debt offerings, and so far CEO Edward Wehmer likes what he sees.

“It’s been a good run for us,” he says in an interview. “Two losses for every one big winner.”

He declines to say what the gain is for Wintrust Ventures overall.

Winners have included The

Mom Project, which matches employers with new mothers recently departed from the corporate workforce who are looking for part-time work; Cohesion, a software firm serving office landlords; and Foxtrot, a specialty provider of beer, wine, snacks and prepared foods.

Now a $50 billion-asset bank, Wintrust was less than half that size when it launched its venture-capital arm. Senior Vice President Bailey Moore, who launched the unit at age 28, remains head of Wintrust Ventures. It was an unusual tack for a commercial bank that, like most such business lenders, focused on established businesses that were profitable.

At the time, it was viewed as something of an experiment. The test clearly has been passed.

Wehmer expects this new round of $50 million will be allocated more rapidly than the first round. “We’ll be replenishing all the time, too,” he says, as investments are liquidated.

2/25/22 2:17 PM

Thursday, May 19, 2022 | Hilton Chicago

Submit Your Outstanding –Achievements of 2021– Architect of the Year – Core/Shell Architect/Interior Design Firm of the Year – Owner Projects Build to Suit Project of the Year Community Impact Project of the Year Deal of the Year Developer of the Year – Chicago/ Suburban Development of the Year – Commercial/ Industrial/Residential Engineering Project of the Year

Industrial Broker of the Year Interior Contractor of the Year – Owner Project Interior Contractor of the Year – Tenant Project Interior Design Firm of the Year – Tenant Project Investment Broker of the Year – Institutional Investment Broker of the Year – Private Capital

Office Broker of the Year Office Property Representative of the Year Project Manager of the Year Property Management Company of the Year – Commercial/Residential Redevelopment of the Year – Chicago/ Suburban Retail Broker of the Year Special Achievement of the Year

Submissions are due by Friday, March 25 at 3 p.m.

Submit your achievement at chicagosfoodbank.org/realestate Presenting Sponsor

Media Sponsor

Benefiting

For more information, visit chicagosfoodbank.org/realestate or email fooddepository@gcfd.org

tab doc.indd 1

22cb0059.pdf

RunDate 2/28/22

FULL PAGE

Color: 4/C

2/22/22 7:36 AM

From your name on the door To your name on the building Ambition drives your business and helping you reach your goals drives us. With expert advice and banking solutions tailored to you, our team is here to get you from where you are, to where you want to go.

COMMERCIAL BANKING | CAPITAL MARKETS | PRIVATE WEALTH

cibc.com/US Loans subject to credit approval.

The CIBC logo is a registered trademark of CIBC, used under license. ©2022 CIBC Bank USA. Products and services offered by CIBC Bank USA.

tab doc.indd 1

22cb0063.pdf

RunDate 2/28/22

FULL PAGE

Color: 4/C

2/22/22 2:20 PM

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 15

ACTION ON ESSENTIALS: City shoreline, broadband networks, water pipes are due for upgrades. PAGE 18 KEY CONSIDERATIONS: What Chicagoans think will make the city more attractive. PAGE 18

A WINDFALL FOR

INFRASTRUCTURE Chicago and Illinois are set to spend billions to upgrade roads and rails, fortify lakeside stretches and close the digital divide. Job one is getting all the parties to collaborate.

BY MARK GUARINO

FIND THE COMPLETE SERIES ONLINE

ChicagoBusiness.com/CrainsForum

Anyone who has sat nervously in traffic under a crumbling highway viaduct, waited in gridlock traffic on the Eisenhower or waited for a CTA bus that never showed up understands how much of a problem infrastructure is in Chicago.

City policymakers and their private partners want to solve all of the above.

Starting this year, Illinois will receive nearly $18 billion in federal infrastructure funds, on top of the $45 billion the state already committed to repair roads, bridges, rails and more—a collective windfall for infrastructure that this area has not witnessed at any other point in its history.

“It’s massive,” says Gia Biagi, com-

JOHN R. BOEHM

ILLINOIS INFRASTRUCTURE

PLACES TO CALL HOME: Houses are about as basic as you can get with infrastructure. PAGE 20

missioner of the Chicago Department of Transportation. “Everybody recognizes this is a moment. It is a singular chance to shift fortunes and to scale everything up.”

It’s also a chance to get multiple interests to play well together and address some of the long-standing inequalities that contribute to the city’s glaring economic divide.

The physical assets that transformed Chicago into a global powerhouse are the same that pose the greatest threats to its sustainability over the next 100 years. The city and the surrounding See WINDFALL on Page 16

SPONSORS

P015-P021_CCB_20220228.indd 15

2/25/22 3:35 PM

16 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

WINDFALL region are home to many of the nation’s oldest highways, rail lines and water networks. Interstate 94, the first highway in this area, was ready for morning commutes starting in 1951. The Loop elevated line, which opened in 1897, is more than a half-century older.

Chicago’s waterway system is older than both.

Like people, infrastructure can age gracefully if properly maintained with the right nips and tucks.

But proper maintenance—“asset management” is what urban planners call it—was not part of the vernacular when ribbons of interstate highway started unfurling from coast to coast after the Second World War. Instead, standards established in 1966 by the U.S. Department of Transportation called for the shiny new roads and bridges to be used until their useful life was no more and then just be built again.

P.S. Sriraj, director of the Urban Transportation Center at the University of Illinois Chicago, says that mindset directly led to decades of deferred maintenance.

“For too long they’d let an asset run down past its useful life and cancel it out,” he says. What early transportation experts didn’t understand is what researchers in his field discovered about 20 years ago: That maintenance every two to five years of a rail line, road, bridge or a highway “would actually pay off over the long run” and not lead to the crisis moment we are experiencing today. “The nation’s infrastructure is crumbing,” Sriraj says. “These assets have not been maintained or renovated as needed on a frequent basis.”

The failures are seen in the dismal infrastructure grade Illinois received from the American Society of Engineers in 2018, its most recent report. The state’s overall infrastructure received a C-; its bridges, dams, drinking water, ports, wastewater and rail were designated between C- and C+; and transit and roads each earned a D. The C- overall rating, the organization says, should be considered “an alarm” that the

Dorval Carter Jr., president of the Chicago Transit Authority, views public transit “as the heartbeat of the city.”

Continued from Page 15 “prioritization of infrastructure has faltered, and the systems’ condition are starting to decline because of it.”

“Those responsible for the dayto-day design and maintenance of our infrastructure systems are struggling to effectively maintain the foundation of our modern society with inadequate funding in the face of increased usage, aging systems, and rapidly changing lifestyles and economies. As a result, many of our infrastructure systems are struggling to stay in adequate condition,” the authors of the report stated.

Local lawmakers not only need to restrengthen existing infrastructure inventory, but because of issues like climate change, they also must reimagine some of it. Among the existing projects are replacing about 400,000 toxic lead water lines, repairing the Lake Michigan shoreline from existing environmental damage and for protection against future erosion, providing citywide broadband access, converting Chicago’s bus fleet to electric, and extending CTA lines and other public rail systems to accommodate the migration of jobs from the city to the suburbs.

“We have more neighborhoods of concentrated poverty with no good public transportation. Even if you get that Amazon warehouse job, it’s nowhere where you live,” says John Austin, director of the Michigan Economic Center and nonresident senior fellow at the Chicago Council on Global Affairs. “Segregation separates people from the economy if they aren’t connected.”

FUNDING SPIGOTS FLOWING

Of the $1.2 trillion Infrastructure Investment & Jobs Act that President Joe Biden signed in November, Illinois’ share comes to roughly $18 billion, or 1.5%. That will go toward infrastructure rebuilding starting this year through 2026. And more than $4 billion will cover transit investments.

Among other expenditures, the Illinois portion of the federal dollars will be used to: ◗ Mitigate the risk of recurring

damage from extreme weather events, such as flooding and other natural disasters ($5.2 billion). ◗ Replace and support bridges ($1.3 billion). ◗ Improve highway safety ($533 million). ◗ Fund projects that incorporate natural infrastructure, like flood protection ($257 million). ◗ Support statewide freight highway projects ($257 million). ◗ Support carbon-reducing projects, such as bicycle and pedestrian infrastructure ($226 million). ◗ Support alternative charging and fueling infrastructure ($149 million). ◗ Install protective devices at railroad crossings ($57 million).

The federal money will help cover the backlog of projects Gov. J.B.

Pritzker earmarked with Rebuild Illinois, his own infrastructure program that set aside $45 billion over six years in 2019. The spotlight on infrastructure, and the opportunity to finally do something about it, “is very exciting and overwhelming,” says Laura Wilkison, deputy executive director of plan implementation and legislative affairs at the Chicago Metropolitan Agency for Planning, or CMAP, which is helping to facilitate funding planning for the city. “We are at a moment in time where we’re fortunate to have funding, which has not been our M.O. in the past.”

The federal infrastructure act does not specify projects, so allocating which dollars go to which programs is a complex and competitive process and requires working tightly with federal part-

ners, some of whom haven’t been friendly to cities that lean Democratic. That has changed, says Dan Lurie, chief of policy for Chicago Mayor Lori Lightfoot. “We have for the first time in this administration a real partner in D.C. and in Congress,” he says.

Just last summer, U.S. Transportation Secretary Pete Buttigieg visited Chicago to tour sites that need federal dollars. “There is no better place to talk infrastructure than Chicago. Infrastructure made Chicago because Chicago made infrastructure,” he said at the time.

“We have to support that with good policy.”

Kate Lowe, an associate professor of urban planning and policy at UIC, says the funding gives the region an opportunity to make big advances in green infrastruc-

ture safet behi citie amp dedi carp I-290 aims clogg To s mak ing a you throu

Th mak is no and tures vestm

CHICAGO AREA TRANSIT INFRASTRUCTURE NEEDS In 2018 the Chicago Metropolitan Agency for Planning released a comprehensive regional infrastructure plan, On To 2050. The plan outlined the greatest infrastructure needs in the area and offered recommendations on how to address those challenges.

Chicago

94

90

294

Improvement area

94

Chicago

Chicago 90

Reconstruction area

90

57

DuPage County

Rail improvements

290 294

Cook County

Chicago

CTA NORTH RED/PURPLE LINE MODERNIZATIONS

Estimated cost: $4.28 billion Improves deteriorating structures and track from the Belmont to Linden stations.

Source: Chicago Metropolitan Agency for Planning

P015-P021_CCB_20220228.indd 16

Cook County

Cook County

Expansion area

CTA RED LINE SOUTH EXTENSION

94

Estimated cost: $2.07 billion Extends the Red Line south to 130th Street from its current end point.

Cook County 55

CTA BLUE LINE FOREST PARK RECONSTRUCTION

Estimated cost: $1.73 billion Reconstructs and modernizes the Forest Park Branch of the Blue Line.

Will County

75TH STREET CORRIDOR / SOUTHWEST SERVICE ENHANCEMENTS Estimated cost: $1.70 billion Untangle railroad tracks, reduce traffic, add Metra flyover, additional track.

2/25/22 3:35 PM

U

E T in

been emoDan cago ve for strand in

ransigieg that is no cture made made time. with

ofesolicy s the make truc-

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 17

JOHN R. BOEHM

back the clock of historic segregation that has divvied up Chicago’s South and West sides for much of the last century. “We’ve got to think holistically about how we really make catalytic investments,” she said last summer at an event with Buttigieg. That wide lens has meant breaking down silos within City Hall and having multiple departments work in sync to spark economic rejuvenation in areas that have been dormant.

The project that serves as the best model for how the city views infrastructure is the 5.3-mile extension of the CTA Red Line south from 95th Street to 130th Street.

When completed, the project will bring four new stations to the areas of the Far South Side that have long been isolated from the city’s transit system.

CTA President Dorval Carter Jr. characterizes the estimated $2.3 billion project not just to connect riders to the rest of the city, but also to enhance neighborhoods along the route. For this reason, he views public transit “as the heartbeat of the city.”

The CTA investments, which also include rebuilding the Lawrence, Argyle, Berwyn and Bryn Mawr stations on the North Side, are conduits “that will ultimately transform” neglected communities. “What we’re trying to do is put all the pieces together.”

Another prominent project stitching together different elements is the 75th Street Corridor Improvement Project. Located in a pocket of the Southwest Side that is dangerously congested by four industrial freight rail lines, Metra, Amtrak and the Dan Ryan Expressway, the project aims to untangle major bottlenecks, public safety hazards and environmental risks by reconfiguring tracks, constructing a pedestrian flyover and installing various crossovers, signals, road crossings and streetscapes. The project is a behemoth, requiring the coordination of a staggering number of private and public agencies and multiple levels of governments that, in the past, might not have been possible to manage. Transportation Commissioner Biagi says the project represents “a unique partnership

ture and bicycle and pedestrian safety, all areas Chicago has been behind on compared to other cities around the world. One example is giving buses their own dedicated lane or incorporating a carpooling lane in the proposed I-290 construction project, which aims to mitigate one of the most clogged thoroughfares in the U.S. To solve congestion, “Cities can make choices. Instead of calculating a higher vehicle throughput, you can calculate a higher people throughput,” she says.

TAKING A HOLISTIC APPROACH

The Lightfoot administration is making it clear that infrastructure is not just about making repairs and building gleaming new structures. The mayor is framing the investments as opportunities to turn

McHenry

Lake

Chicago area will keep workers busy for coming years, but most policy consultants say it’s still not enough.

CMAP, for example, estimates that the federal revenue pouring in remains insufficient to cover long-term priorities. Wilkison of CMAP says better legislation is needed at the federal level for sustained infrastructure support over the next 30-plus years. The federal motor-fuel tax, which supports road infrastructure, has not increased since 1993, she says. “Even with (the Biden infrastructure bill), we’re still underfunded. It’s a cycle we’ll continue to be in.”

Sriraj at UIC agrees that funding “has to be led by the feds.”

“It’s not enough,” he says of the $18 billion Illinois is receiving, especially due to its role as the central freight hub of the entire country. “The impact of Illinois on the nation’s economy cannot be overstated.”

Controversial private-public partnerships generated under the Daley and Emanuel administrations would sour the public on similar funding fixes. Sriraj says that Illinois can change funding legislation to support the CTA through the payroll tax instead of forcing it to run itself primarily through ridership revenue, a risky measure especially when the pandemic has forced ridership to decline.

The pandemic, however, is also giving agencies like the CTA an opportunity to experiment with alternative models, which might serve riders more efficiently. One example: A new fleet of electric buses to replace the old. “You’re not going to make up for decades of disinvestment in one bill,” but it “will absolutely make a dent,” Carter says.

No matter what the ridership levels may be in future years, “the need for people to move around in a large urban environment is never going to go away; the question of how and where it works is what the future will be about,” he added. “It ultimately becomes about the quality of living in the city of Chicago and what we’re willing to pay to achieve that.”

BIG INCREASE IN INFRASTRUCTURE INVESTMENT States and localities across the nation saw an increase in apportionments under the Infrastructure Investment & Jobs Act. Illinois’ increase for 2022 was the seventhlargest in the nation.

2022 INCREASE IN AUTHORIZED HIGHWAY FUND APPORTIONMENTS VS. 2021 Washington, D.C. 51.8% Vermont 47.8% Wyoming 44.0% Alaska 43.7% New York 41.9% Maine 41.7% Illinois 40.9% North Dakota 40.8% Note: Excludes territories other than Washington, D.C. Source: Chicago Metropolitan Agency for Planning

that doesn’t exist in any other market in the country.”

To Alyssa Fisher, the city’s deputy director of intergovernmental affairs for federal affairs, the scope of the project has demanded “more silo busting” of policymakers. “We’re seeing opportunities which are forcing us in real positive ways to work collaboratively across the region to make sure there are gains holistically across communities,” she says.

To see the project to completion, the city and state will pursue competitive rail grants under the infrastructure bill.

Much like other needs in the city, the federal money will be used to fill in gaps for projects throughout the area not fully covered by Chicago Works, Lightfoot’s five-year, $3.7 billion initiative to prioritize infrastructure needs, such as annually repaving 75 miles of arterial streets—double the amount in a typical year— and 500 side streets.

Under Chicago Works, the city also plans to repair underpasses,

viaducts and bridges; replace 300 blocks of streetlight infrastructure; modernize traffic signals; repair sidewalks; install wheelchair ramps at intersections; and fulfill 24 streetscape projects, which will involve planting 12,000 new trees.

Funding the first two years, 2021 and 2022, is $1.4 billion in general obligation bonds. The federal money is also accelerating large-scale projects, like the Englewood Line Trail, a proposed 1.7-mile elevated walking path along an abandoned rail line that could evolve into a network of trails—the ultimate goal of community partners, the Chicago Department of Transportation and the Chicago Park District. “We could do a bunch of one-offs, but if we are going to get to scale and connect communities, we’ll need to think regionwide. This funding is an important step in that direction,” says Lurie.

STILL NOT ENOUGH

The certainty of money directed toward infrastructure in the

Continues to Wisconsin

Union Pacific North

Kane DuPage

Union Pacific Northwest McHenry

Lake

Chicago

294

94

Reconstruction area

O’Hare

290 290

Kane

Will Cook

DuPage

94

90

90

Access area

Cook County 55

355

294

Chicago

Cook County

DuPage County

UNION PACIFIC NORTH IMPROVEMENTS

Estimated cost: $0.98 billion Track, signal, safety, and infrastructure improvements; increased service.

P015-P021_CCB_20220228.indd 17

UNION PACIFIC NORTHWEST IMPROVEMENTS AND EXTENSION

Estimated cost: $0.72 billion 1.6-mile extension to Johnsburg, more yard space, track and signal upgrades.

I-290 EISENHOWER RECONSTRUCTION

Estimated cost: $2.07 billion Reconstructs the expressway, improves bridges that are in poor condition.

ELGIN O’HARE WESTERN ACCESS

Estimated cost: $1.58 billion Provide a new facility to reduce congestion and improve access to the airport.

2/25/22 3:35 PM

18 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

Money flows toward often overlooked but essential facilities

E

Q I

BY MARK GUARINO Infrastructure in Chicago goes beyond trains, highways and bridges. Today, it also means pushing back against climate change, expanding broadband internet access and replacing hundreds of lead water pipes.

Because the city is nestled along 22 miles of Lake Michigan shoreline, climate change is now demanding urgent action with an alarming rise in water levels.

Despite a record low set in 2013, water levels along the city shoreline increased more than 6 feet in just seven years. Although levels peaked in late 2020, Lake Michigan is still 22 inches above its average level, U.S. Army Corps of Engineers data shows.

In January, the agency allocated $1.5 million from the Biden administration’s Infrastructure Investment & Jobs Act to the Chicago Shoreline Storm Damage Reduction Project, which specifically addresses strengthening the shoreline against erosion caused by extreme water level swings that in recent years have led to downtown flooding, overtopping of the Chicago River, flooding of Jean-Baptiste Pointe DuSable Lake Shore Drive and water crashing up the sides of lakeside apartment buildings and structures.

The federal funding arrived at the urging of Illinois Democrats who demanded increased attention to

“one of Chicago’s most valuable assets,” U.S. Sen. Dick Durbin said in January. “As the shoreline continues to face environmental threats from extreme weather and erosion, it’s more important than ever that we take real steps toward protecting it,” he said. The funding is in addition to the $185 million Durbin helped direct to the shoreline project over the last 20 years.

The delicate balance between Lake Michigan and the Chicago River is at the heart of the challenge, such as when the backup system that sends river water into the lake during storms fails, elevating lake levels.

Since January 2020, when 20-foot waves and 50 mph winds slapped against the shore, the Metropolitan Water Reclamation District of Greater Chicago has approved $1.5 million for repairs along the lakefront near Morgan Shoal between 47th and 51st streets to prevent further erosion and protect Lake Shore Drive from damaging waves.

It didn’t end there. In September 2020, the water reclamation district and the Chicago Department of Transportation helped fund the Army Corps of Engineers’ work to build 20-foot-wide, 800-foot-long concrete barriers to protect part of the lakefront trail. The work was completed last May. Also, last spring, Lightfoot announced she was allocating $12.3 million to reconstruct a mile of lakeshore encompassing Morgan

JOHN R. BOEHM

Chicago’s shoreline, broadband networks and the pipes that deliver water will get a share of federal funding

Shoreline erosion has caused breakwalls to crumble along Lake Michigan in Chicago’s Rogers Park neighborhood.

Shoal, a 32-acre aquatic wildlife preserve that sits about 300 feet offshore from Hyde Park.

CLOSING THE DIGITAL DIVIDE

Seeking to improve everyone’s access to the internet, the White House included funding in the infrastructure bill for broadband expansion. In Cook County, 24% of residents lack high-speed connections and 43% of households are unconnected, according to county data. In fact, the number of homes in the county lacking internet access is equal to that of all rural Illinois.

The incoming federal money aims to change that. Illinois is expected to receive at least $100 million to deliver broadband coverage to about 228,000 people in the state.

The money will also make 2.9 million people, or 23% of the state’s population, eligible for a benefit that helps low-income families get online.

The issue of internet connectivity is one that is already a priority of the

current administration in Springfield. Gov. J.B. Pritzker launched a $400 million statewide initiative in late 2019 to expand broadband access through special grants. An additional $20 million was used to support the Illinois Century Network, a high-speed broadband network that serves K-12 public-school students, museums, public libraries, local governments and higher education institutions. The network owns or leases about 2,100 miles of fiber-optic cables running throughout the state.

A special program in 2020 raised $50 million to deliver free highspeed internet to more than 100,000 public-school students who live primarily on the South and West sides. Citadel CEO Ken Griffin donated $7.5 million, with other philanthropic organizations, including the Crown Family Philanthropies, the Joyce Foundation and former President Barack Obama and first lady Michelle Obama, contributing the rest.

GETTING THE LEAD OUT

Under the new federal infrastructure law, Illinois will receive about $288 million to replace nearly 400,000 lead service lines and other water-related programs. Illinois has the highest number of lead service lines in the country, based on data from the Natural Resources Defense Council.

Chicago has the most lead pipes in the state and more than any city in the U.S. Lead service lines that carry drinking water can leach a dangerous neurotoxin that is damaging to the brain, among other maladies.

The federal infrastructure funding is only a drop in the bucket. The city says it will cost nearly $9 billion to replace all the pipes. Progress since Lightfoot announced a plan to replace about 600 lines by 2021 has been slow. The federal money is expected to help pick up the pace, although state law passed last year gives Chicago up to 50 years to complete the job.

Residents rate living costs over improved infrastructure

BY WILLIAM JOHNSON Like most big cities across the country, Chicago has struggled to maintain its luster during the COVID-19 pandemic and subsequent crime spikes, and residents have taken notice.

The Harris Poll’s 2021 MetroPoll Study found that, compared to 70% of all U.S. adults, more Chicago residents (76%) believe their city is attracting new residents and businesses. Nearly half of these residents (48%) cite infrastructure as one of the reasons why. This is higher than just 40% of all adults who feel the same way about their own cities. However, two-thirds (65%) of city residents moved or considered moving within the past year, with the largest share (40%) thinking about leaving the Chicago

P015-P021_CCB_20220228.indd 18

area entirely.

City leadership faces a unique challenge—amid a spike in crime and an ongoing pandemic, how can they retain residents and attract new businesses? And could they potentially benefit from the Bipartisan Infrastructure Bill to attract new businesses through the promised infrastructure improvements?

A huge majority of Chicago residents (95%) say that infrastructure is important to them (compared to 89% of Americans), also extending that level of importance to key aspects like transportation (72%).

Chicago residents show the greatest preference for local gov-

In supplemental reernment, instead of fedsearch of the Chicago eral or state government, area, The Harris Poll to take the lead on infrafound that for residents structure (42% vs. 15%, who moved or considrespectively). In fact, ered moving in the last their preference for local year, infrastructure conleadership is higher than cerns were rarely a prithe general population’s ority. Cost of living (60%) (42% vs. 31%). No matwas the leading motivater what federal funds William Johnson are made available, it’s is CEO of The Har- tion for leaving. Only 8% cited infrastructure conclear that more Chicago- ris Poll, a global cerns as a contributing ans would prefer the city public opinion, factor in their decisions. set the agenda for infra- market research While Chicagoans may structure development. and strategy firm. appreciate improved While satisfaction of existing systems is high (80%), a infrastructure in their neighborthird of city residents (35%) still hoods, this does not remain a key want additional infrastructure re- consideration in their decision to sources in their neighborhoods. move. City leadership should focus However, we may want to look be- on ensuring a reasonable cost of yond infrastructure improvements living to reverse the tide of people considering relocation. to retain and attract residents.

◗ SURVEY ON INFRASTRUCTURE PERCENTAGE OF RESIDENTS WHO SAY INFRASTRUCTURE IS IMPORTANT TO THEM Chicago area

95% U.S. residents

89% Residents of major metros

92% PERCENTAGE OF RESIDENTS WHO SAY TRANSPORTATION IS IMPORTANT TO THEM Chicago area

72% U.S. residents

71% Residents of major metros

76% Source: The Harris Poll

2/25/22 3:35 PM

ll th ta for g the t way five i seve airpo wher railro alon mod And com Bu know and m com 2019 of th struc The R lion i our f that w

R

W n tr

W

Inve vem dent crum of th botto La ciety Unit ture “This coul trillio ize o boar In are a repre of Tr Cong the D noun for u bridg La joine Corp to an tect o We h trem and flood abut

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 19

ESSENTIAL INVESTMENTS

nfraceive early other s has rvice data ense

pipes y city that ch a damother

und. The illion gress plan 2021 oney pace, year com-

re

RE

HEM

5%

%

%

HEM

billions in funding for the Kenllinois has a storied history as nedy Expressway, I-80, Congress the most important transporParkway, the Chicago Transit tation hub of the nation, and Authority, the Chicago Region for good reason. We’re home to Environmental & Transportation the third-largest interstate highEfficiency Program, a new simuway system in the United States, lated hospital and nursing lab at five international airports and Chicago State University, and so seven additional commercial much more. The new construcairports. This is the only state tion is supporting and creating where all seven Class 1 freight hundreds of thousands of jobs. railroads converge. Chicago J.B. Pritzker is the Our highly talented laborers alone is the third-largest intergovernor of Illinois. have already repaired over 3,300 modal port in the entire world. miles of roads and 320 bridges in just the last And our ecosystem of shipping and logistics two-and-a-half years. Projects are coming in companies is second to none. on time and on budget. New and upgraded But in recent decades, Illinois came to be passenger terminals are being built at our airknown less for those economic advantages ports. We’re updating our passenger rail and and more for bad road congestion, notorious transit systems. We’ve invested in affordable commutes and aging bridges. That’s why, in housing, crime labs, municipal water plants, 2019, I worked with lawmakers on both sides new sewage systems and high-speed internet of the aisle to deliver the most robust infraservice. And we’ve done it all in a way that structure modernization plan in the nation. confronts the realities of climate change and The Rebuild Illinois capital plan is a $45 bilinequity head-on. lion investment in growing jobs, investing in Illinois was recently named the nation’s our future and building an Illinois economy No. 1 state for infrastructure and the that will work better for everyone. It includes

15th-best state for business, up 15 spots since I came into office. States that invest in the underpinnings of future growth— like modernized infrastructure—attract jobs and entrepreneurs.

Last year, Illinois was not only the top state in the Midwest for new business creation, but we grew more than any of the other top eight most populous states nationally—ahead of California, Florida and Texas to name just a few. In 2021, Illinois saw its highest-ever number of new business startups since the data was first reported in 2004.

In short: Modernizing our infrastructure means more business, more jobs and a better economy, along with a shorter commute and lower costs for drivers.

Now, with President Joe Biden’s Infrastructure Investment & Jobs Act, Illinois is on track to receive an unprecedented level of federal funding, which will only expand and accelerate our infrastructure leadership. Over the next five years, Illinois expects to receive at least an additional $15.8 billion to pursue additional critical invest-

ments in roads and bridges, multimodal transportation, an electric vehicle charging network and water infrastructure.

I’m particularly proud that this influx of resources, paired with our efficient construction of transportation projects over the last few years, offers us the opportunity to give working families a $135 million gas tax break as part of my proposed billion-dollar tax relief plan, called the Illinois Family Relief Plan. It will lower taxes for Illinois residents right now to alleviate the burden of rising prices for gas and food and property taxes.

Quality infrastructure is so essential to growing our economy, yet sometimes we forget how roads and bridges got there in the first place. At important points in our history, leaders got together to think big about how to make life better for American families. In the 1930s, that was the Rural Electrification Act. In the 1950s, it was the Interstate Highway System.

Today, it’s Rebuild Illinois and the Infrastructure Investment & Jobs Act. And as we work to shape a strong and equitable recovery, they couldn’t come at a better time.

REVITALIZATION

We’re finally funding neglected roads, bridges, transit, water systems

W

drifts all too often crash onto hen President Joe Jean-Baptiste Pointe DuSable Biden signed into law Lake Shore Drive, sometimes the Infrastructure bringing traffic to a halt and Investment & Jobs Act last Notrapping motorists. The Army vember, he unleashed unpreceCorps has announced that it dented actions to revitalize the had received $1.5 million from crumbing physical foundation the Infrastructure Investment of the United States from top to & Jobs Act to begin to address bottom. these issues.

Last year, the American SoSadly, Chicago has more ciety of Civil Engineers gave the Jan Schakowsky water service lines with lead in United States’ overall infrastruc- represents Illinois’ them than any other area of the ture a rating of C-minus, saying 9th Congressional country, with over 400,000 homes “This is not a report card anyone District and is the in need of new pipes. Lead in any could be proud of.” The $1.2 Consumer Protecamount can cause brain damage trillion investment will modern- tion & Commerce in young children. The good news ize our infrastructure across the Subcommittee’s is that $1.6 billion from the new board: sea, land, air. chairwoman. infrastructure act will come to In the Chicago area, plans Chicago to kickstart Chicago’s plan to replace are already underway. Sen. Dick Durbin, a all lead service lines. representative of the Illinois Department At the start of February, we received of Transportation and several of us in news that Metra would be receiving $513 Congress, recently shivered at a bridge over million, thanks to President Biden’s Amerthe Des Plaines River, built in 1928, to anican Rescue Plan, with more funding to be nounce that this bridge would be on the list announced later this year. for upgrades, along with 2,373 other Illinois That is just the start of the good news bridges officially rated in “poor” condition. for our local mass transit. I was pleased Later the same week, elected officials to join Sen. Durbin, Mayor Lori Lightjoined the Chicago District of the Army foot, Congressman Mike Quigley, and Corps of Engineers at the Shedd Aquarium lots of public officials and transit workers to announce a comprehensive plan to protect our Lake Michigan shoreline and water. at the Belmont station to celebrate the completion of the first phase of the Red We have seen the dramatic effects of ex& Purple Line Modernization project and treme weather events that have destroyed the start of the next phase. And thanks to and eroded many of our beaches, caused an amendment by Reps. Chuy Garcia and flooding and threatened properties that Marie Newman, the infrastructure bill abut the lake. The winter waves and snow

P015-P021_CCB_20220228.indd 19

BLOOMBERG

JOHN R. BOEHM

Quality infrastructure vital to state’s economy I

The federal infrastructure bill includes $7.75 billion to create a network of charging stations across the country. included dedicated funding for making accessibility improvements to Chicago Transit Authority stations.

To help reduce greenhouse gas emissions, the Infrastructure Investment & Jobs Act includes $7.75 billion to create a network of charging stations across the country, especially around Chicago and throughout the state of Illinois. Paired with the Reimagining Electric Vehicles in Illinois Act that Gov. Pritzker signed into law in November, Illinois is poised to be a leader in the U.S. electric vehicle movement.

I worked with advocates to include several provisions on vehicle safety in the infrastructure bill, including drunk-driving prevention technology, collision warnings, automatic emergency braking and lane departure warnings. The new law requires automakers to improve seatback safety to prevent injuring children and update car hood and vehicle bumper standards to

protect pedestrians and cyclists in case of an accident. These improvements will prevent millions of vehicle accidents and save thousands of lives.

Our country, and Chicago-area communities, deserve world-class infrastructure that connects our neighborhoods, businesses and families for our common benefit and prosperity.

For too long, our roads, bridges, transit and water systems have been neglected, contributing to accidents and lost time and productivity for millions of Americans.

Now, the Infrastructure Investment & Jobs Act has set us on a path to progress and innovation. Combined with the America Competes Act we recently passed in the House, and many other policies of the Biden administration, we are spurring innovation, creating jobs, fighting inflation and bringing our infrastructure into a new era.

2/25/22 3:35 PM

20 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

PAST AND FUTURE

We must include housing in infrastructure spending

CHRISTOPHER DILTS/BLOOMBERG

L

What we need is a more ike our musculoskeletal capacious definition of infrasystems, infrastructure structure, along with an undersupports and empowers standing of how some commuevery aspect of our lives. From nities have been traumatized facilitating transportation and by past infrastructure plans in communications to supplying ways that we do not want to power and water, it creates the replicate. In doing so, we can framework of our nation. And advance a more inclusive vigiven its current sorry state of sion for infrastructure that can neglect, it needs to be modernized not only to keep us Lisa Yun Lee, Ph.D., create justice, equity, inclusivity and opportunities for a more competitive, as politicians and is a cultural activist, participatory democracy. economists like to point out, but director of the NaWhen most of us think of also to support our current and tional Public Housfuture populace. ing Museum and an infrastructure, we imagine roads, bridges, transportaIn fact, our nation’s infraassociate professor tion and sanitation systems. structure is so dangerously at the University of But what good are these forms overstressed that our future is at Illinois Chicago. of infrastructure without safe, risk. The U.S. ranked 13th in the affordable and decent places to live? most recent World Economic Forum’s Global Without housing, a place to take care Competitiveness Report and earned a C- on of one’s family and sustain a safe, healthy the American Society of Civil Engineers’ 2021 and respectable quality of life, people infrastructure report card. Poor infrastruccannot survive and thrive. During the panture compromises health, welfare and safety, demic, an affordable home became one and costs us billions of dollars in lost ecoof the most important assets for survival. nomic productivity.

A flyer urges a rent strike in Chicago in May 2020.

Housing is infrastructure.

Public and affordable housing is a longterm asset that nurtures people across all divides, from families with young children to veterans, the elderly or disabled. Disin-

vestment in public housing over the last decade and historic levels of underfunding have contributed to the loss of over 10,000 units each year.

Between 1990 and 2010 alone, the

Dep men units majo shor $2 tr gles inve infra Ye infra or ou are h grow frast ated ineq used Fr freew Expr way also segr com unde colo disa tran tiona At um, dedi and to en call h

PREPARATION AND PLANNING

What trends tell us about future workers’ needs

C

where the community is open hicago businesses will to repurposing land, such as in need a combination of Bensenville, where 100 homes “attract, train and retain” were demolished to make way to meet the region’s future emfor four industrial buildings. ployment needs, based on what Urban developments are also in commercial real estate trends the mix, with more creativity in tell us. design required to accommoLooking at our own commerdate smaller land parcels. While cial real estate portfolio for the all of this growth does bring Chicago region, we see: jobs, Illinois manufacturing jobs The region’s position as a Karen Case is presdropped from 850,000 in 2000 to transportation hub preserves ident of U.S. Com559,000 in 2010, a level that has manufacturing as an industry mercial Real Estate essentially plateaued ever since, and drives continued growth at CIBC. CIBC is a according to the Bureau of Labor in warehouse and distribution sponsor of Crain’s Statistics. facilities.

Forum.

Clearly, more and more of Growth is coming in industries the newer warehouse and distribution that require a more educated workforce facilities are relying on automation and with more reliance on automation and less robotics, in part because the competition on line workers, yet we have growing needs for warehouse and fulfillment labor has for skilled trade laborers that are unmet. been fierce. Locally, look no further than Technology and life sciences will continthe Elk Grove Technology Park, which ue to emerge as growth industries in the CIBC financed for developer Brennan region.

Investment Group. The former Busse Farm E-commerce trends have and will continis now a three-building complex occupied ue to influence our commercial real estate by tenants that are smart manufacturers landscape and the jobs that are created. and data centers, including household The region’s position as a transportation names like Microsoft. While these facilities hub continues to support the flow of goods may not need as many employees as the across the country. Though online sales assembly lines of old, they do need skilled represent less than 15% of U.S. retail sales operators. (having retreated to pre-pandemic levels), Turning to the life sciences sector, this inomnichannel retailers need fulfillment cendustry has been growing at a rapid pace for ters, and development of warehouse and years, though the Chicago region currently last-mile facilities continues to expand. Not sits just outside the top 10 life sciences surprisingly, most of that is in the suburbs markets in the United States. Boston, San where there is enough land at lower prices Francisco and San Diego lead the way. But to support these massive facilities—or

P015-P021_CCB_20220228.indd 20

we expect that to change. With leading institutions such as the University of Chicago, Northwestern University and Rush University, we certainly have the talent to support research and development, and anticipate Chicago’s position as a tech and life sciences hub will take on a more meaningful presence.

Yet for all this development activity to continue, we need to attract, train and retain trade workers—plumbers, electricians, carpenters, steel workers. The commercial real estate industry estimates it needs 61,000 new workers per month over the next two to three years.

Apprentices are entering the workforce

2/25/22 3:35 PM

at a out o that ther we n pay attra colle

to

. e

CHRISTOPHER DILTS/BLOOMBERG

Department of Housing & Urban Development estimates, the U.S. lost over 300,000 units of affordable public housing. In major metropolitan areas, this housing shortage has cost the American economy $2 trillion each year. As the nation struggles with an affordable housing crisis, investing in public housing is investing in infrastructure.

Yet more disturbing than the large infrastructure gaps like affordable housing or outdated roads and power grids that are hampering our productivity and growth is the fact that investments in infrastructure post World War II, which created massive growth, also created massive inequities. Infrastructure has long been used to further racist and classist policies.

From metropolitan Los Angeles’ vast freeway system to Chicago’s Dan Ryan Expressway to the Cross Bronx Expressway in New York City, infrastructure has also caused the most noxious forms of segregation, dividing white and Black communities. Poor infrastructure has left underserved people and communities of color exposed to more pollutants, natural disasters, poor roads, inadequate public transit, deficient health care and educational facilities and more.

At the National Public Housing Museum, the nation’s first cultural institution dedicated to interpreting our troubled and ambitious housing history, we work to ensure that all people have a place to call home. To effect change, we know that

there will need to be an infusion of money and resources to create more public and affordable housing. We also know a poverty of imagination and lack of will to do this exists, based on stereotypes and misunderstandings about what public housing is, who it is for, and what it has meant to people.

Knowing what went wrong and what went right is crucial to solving our housing crisis. The museum deploys storytelling, artist projects, exhibits and public forums that challenge us to ask what we have not yet learned from history—specifically to help us reimagine our futures.

Our oral history program gathers stories of public housing residents and invites us all to listen deeply to accounts that challenge dominant narratives of what it means to be a poor person living in public housing. This provokes us to confront realities around our nation’s racialized history, grapple with the impact of federal policies like redlining and the history of policing, and understand the connections between public education and housing.

Changing the mainstream narrative and understandings of history is a critical part of addressing our nation’s lack of housing.

To quote hip-hop scholar Jeff Chang, “Nothing has ever changed without a radical leap of imagination.” To create a nation that will keep us competitive and support our current and future populace, affordable housing must be considered a critical part of our nation’s infrastructure.

at a much slower pace than the aging out of the baby boomers. It is imperative that we focus on training in fields where there is a deep shortage of workers, and we need to ensure these jobs have the pay and benefits to make them just as attractive as those that don’t require a college degree.

Like many of the challenges facing Chicago today, there isn’t one simple solution. Yet ensuring we attract and retain the highly educated workforce to support emerging industries while having sufficient infrastructure and training to support a new generation of skilled trades workers is critical to our vitality.

JOHN R. BOEHM

st dr

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 21

P015-P021_CCB_20220228.indd 21

The Fern Hollow Bridge in Pittsburgh, which collapsed on Jan. 28.

REGIONAL RESILIENCE

Northeast Illinois needs a shared transit vision

T

The high costs of car ownerhe Fern Hollow Bridge ship create barriers that make collapse in Pittsburgh is driving unaffordable for housejust the latest example of holds with low incomes, and why investments in our aging our communities of color also infrastructure are long overdue. travel longer—and at younger The decades-old bridge had ages—to reach school, work, been listed in poor condition grocery stores and doctors, as since 2011, with inspectors past research from the Chicaraising concerns about the congo Metropolitan Agency for dition of steel supports.

Planning, or CMAP, has shown.

Northeastern Illinois also Erin Aleman is This reinforces the important has seen its share of problems executive director role transit plays in connecting with aging infrastructure over of the Chicago the years. We need investments Metropolitan Agency people to opportunity.

But the transit system still that can make our transportafor Planning. is faced with a $34.2 billion tion system stronger and more gap between current revenues and the resilient for the next generation of users. investments needed to maintain a state of The historic $1.2 trillion Infrastructure good repair. Northeastern Illinois needs Investment & Jobs Act offers an incredible investments that can meet the modern opportunity to create a transportation sysdemands of our workers and achieve a tem that serves everyone better. Modern, more inclusive and thriving region that multimodal travel will make it easier for has far too often left residents with limited people to access our best-paying indusresources behind. tries in urban, suburban and exurban While it’s often difficult to see, infraareas throughout our region. We have structure is the literal route to a strong come together before to solve these chalquality of life. Our residents use it every lenges and now is the time to do it again. day to reach jobs, socialize with family, The opportunities this new infrastructure bill provides are enormous, increasing fund- access health care and basic necessities safely and reliably. Our economic success ing for core programs and creating more depends on it. than 20 competitive grant programs to reAs the region’s comprehensive planning build roads and bridges, address the climate agency, CMAP is in a unique position to crisis and strengthen disinvested communihelp build regional consensus around the ties. Each of our region’s 284 communities best path forward. We plan to convene easily could compete against one another our stakeholders and communities, align for these dollars, reinforcing inequities that our priorities around the key elements of has made it harder for residents to access the law and ensure our entire region can jobs and upward mobility. benefit from these new resources.

The biggest transportation challenges A region that can unite around a shared facing our communities in northeastern vision will be able to maximize the opporIllinois have revolved around sustainable tunities in the new federal infrastructure resources. Over the past few decades, our bill. Our communities of color also will be region has had to piece together funding better positioned to advance important from different sources to simply maintain projects that can modernize our aging our infrastructure. However, in 2019, we infrastructure and improve quality of life. invested in ourselves with Rebuild Illinois.

CMAP and our partners have worked The statewide capital plan puts Illinois in together in the past to move forward big a strong position to match the new federal ideas forward through carefully made dollars coming from this bill. plans. When this region speaks with one Our region’s transit system has been voice, we’ve shown we can accomplish invaluable to the many residents and anything. Let’s get to work. essential workers during the pandemic.

2/25/22 3:35 PM

22 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

Former John Hancock building seeks health care tenants to fill vacant offices

Steve Hearn hired the health care advisory team from Cushman & Wakefield to lead the medical leasing effort at the former John Hancock Center.

GETTY IMAGES

130,000 square feet in the lower portion of the 100-story tower, the initial plan is one of the highest-profile examples of a downtown office landlord pivoting as the COVID-19 pandemic has fueled the rise of remote work and threatened to permanently reduce corporate appetites for workspace. Hearn, which has owned the office portion of the tower since 2013, is poised to invest tens of millions of dollars reshaping part of the building on a bet that major hospital chains and private physician groups will clamor for clinical space there and help shore up its tenant roster, while the postCOVID state of downtown offices remains cloudy.

It’s a wager on the wild growth of demand for health care real estate in Streeterville and along North Michigan Avenue, where Northwestern Memorial HealthCare and Lurie Children’s Hospital of Chicago have been snapping up new space for administrative and outpatient offices, and where other major local medical players may be looking to establish themselves. If the plan succeeds, it will not only mark a new chapter in the history of one of the city’s most famous buildings and breathe life into the pandemic-shaken Magnificent Mile, it would help validate another way that some landlords can reposition properties to address the recent flood of office vacancies downtown.

“You can say what you want about the demand for traditional office in this neck of the woods, but no one will argue over the demand for medical in this neighborhood,” says Steve Hearn, who has run his namesake firm for nearly 50 years.

“The future of health care and the need for health care facilities, both in hospitals and outside hospital facilities, is unquestionable.”

Hearn’s vision comes as much out of necessity as ingenuity.

One of the tower’s largest office tenants, real estate software firm SMS Assist, announced last fall it would leave for Prudential Plaza, opening up a big block of available space for Hearn amid record-high downtown office vacancy. The office portion of the building is nearly 30% vacant today, according to Hearn, far higher than the 12% average in the North Michigan Avenue submarket, data from brokerage CBRE shows.

The space gave Hearn the chance to dedicate a portion of the building for clinical space, something he says he had been eyeing since Lurie moved some of its office space into the Hancock in 2018. The children’s hospital has more than doubled its space since then to more than 100,000 square feet.

Core to his thesis is that Streeterville’s 13 million-square-foot supply of health care real estate is nowhere near enough to handle the

JOHN R. BOEHM

HANCOCK from Page 1

demand in the neighborhood. He cites a projection from health care consulting firm Advisory Board that demand for services including orthopedics, physical therapy and pain management within five miles of Streeterville, for example, will all jump by around 25% over the next five years.

“That demand will continue to be there, and will have to be serviced,” Hearn says.

Major health care systems are also collectively pushing more services away from hospital settings and into outpatient facilities that have the infrastructure to handle clinical testing and lab work, fueling the expansion of the

medical office sector during the pandemic. While traditional office demand has been flagging during the pandemic, average occupancy at medical office buildings in the 50 largest U.S. markets in the third quarter of 2021 was almost 92%, its highest level in four years, according to health care real estate research firm Revista.

In Streeterville, the Northwestern hospital system has such a strong appetite for property that it bought the Hyatt Centric Chicago Magnificent Mile hotel adjacent to its campus this month, an apparent step to control more real estate that it could one day reposition for medical use.

Bolstered by those tailwinds and Streeterville’s continued growth as a medical hot spot, Hearn is devoting one of his tower’s north entrances, a pair of elevators and a portion of its parking garage to the medical office block to provide a quality patient experience without disrupting the building’s traditional office users.

“This isn’t ‘gee whiz, we’re going to throw a few trial balloons and see if we attract any attention.’

We’re committed to doing this, and there are significant dollars being spent now and in the future to make this happen,” says Hearn, who hired the health care advisory team from Cushman & Wake-

field to lead the leasing effort. “We think it will be a race for tenants to get a spot here.”

The move still comes with plenty of risk. The pool of prospective users of medical office space is much smaller than that of traditional offices, and building out clinical space—landlords typically help foot the bills—is far more expensive. Hearn estimated the entire investment in the property—including physical updates to the building, tenant buildouts and leasing commissions—could easily approach $100 million. He is still in the process of refinancing more than $200 million in debt on the building to be able to fund the project.

The building must also incorporate more clinical space without scaring off traditional office tenants. Workers sharing a lobby with sick patients could be off-putting for companies that are now trying to give employees more reasons to show up rather than work remotely.

Hearn says the design of medical space is mindful of keeping it separate from other office users, but doesn’t expect problems, citing companies’ successful coexistence with tourists visiting the building’s observation deck.

Helping to offset the higher buildout costs is that most physician groups and hospital systems pay higher rents than traditional office rents. Medical office leases also tend to be longer-term deals and come with the strong credit of a hospital system, which have become even more valuable as the pandemic has pushed many traditional office users to rethink their workspace needs.

Medical office users are “sticky tenants that will grow within your building,” says CBRE First Vice President Dan Persa, who has represented several tenants leasing offices in the North Michigan Avenue submarket. “Throughout the pandemic, a lot of those traditional office users have been shaky on those grounds.”

One potential sweetener for hospital systems is that Hearn is dangling the naming rights to the tower. He says those rights are a “separate opportunity” from the medical office tenant hunt, but that a large user from the health care sector could fit the bill.

Peter Westmeyer, whose Chicago-based Remedy Medical Properties is the nation’s largest owner of health care properties, says naming rights to such a wellknown building could be attractive to users like Rush Health, NorthShore University HealthSystem or other competitors in the area that want to plant a prominent flag in the heart of the city.

“There’s definitely a turf war in Chicago,” he says, “and it wouldn’t surprise me if somebody else wanted to jump in there and compete for the more urban downtown market.”

“YOU CAN SAY WHAT YOU WANT ABOUT THE DEMAND FOR TRADITIONAL OFFICE IN THIS NECK OF THE WOODS, BUT NO ONE WILL ARGUE OVER THE DEMAND FOR MEDICAL IN THIS NEIGHBORHOOD.” Steve Hearn, whose firm has owned the office portion of the former Hancock tower since 2013

P022_CCB_20220228.indd 22

2/25/22 4:01 PM

REAL ESTATE FORUM

Tuesday, April 5 | 7:30 - 9:45 a.m.

Blackstone Hotel | 636 S. Michigan Ave.

A Conversation with Fritz Kaegi When he took office in 2018, Fritz Kaegi set out to make the Cook County property-tax assessment process more accurate, transparent and fair.

In a conversation with Crain’s Senior Reporter Alby Gallun, Kaegi will discuss the steps he has taken to accomplish those goals, the obstacles he has encountered and what lies ahead as his campaign for re-election gears up.

Fritz Kaegi Cook County Assessor

Alby Gallun

Reporter Crain’s Chicago Business

Register at ChicagoBusiness.com/RealEstateForum $85 per ticket | $900 for a table of 10 For event questions contact us at CCBEvents@crain.com

Corporate Sponsors

tab doc.indd 1

22cb0064.pdf

RunDate 2/28/22

FULL PAGE

Color: 4/C

2/24/22 2:31 PM

24 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

.

To place your listing, contact Claudia Hippel at 312-659-0076 or email claudia.hippel@crain.com www.chicagobusiness.com/classifieds CAREER OPPORTUNITIES

CAREER OPPORTUNITY

CAREER OPPORTUNITIES

CAREER OPPORTUNITIES REAL ESTATE

Chicagoland’s latest business news and events.

ChicagoBusiness.com

OUR READERS ARE 125% MORE LIKELY TO INFLUENCE OFFICE SPACE DECISIONS

Find your next corporate tenant or leaser.

Former government mole fights court battles THOMAS from Page 1 the things later in my life, especially when I came out of prison, I’ve been meticulous about not cutting corners anymore. And having trust.”

Some of his lenders and business partners might quibble with that statement today, based on lawsuits they have filed recently against Thomas, his Chicago-based Freedom Development Group and its affiliates. The suits allege he failed to pay back loans, reneged on agreements and diverted funds for unauthorized purposes. The St. Paul office building is in receivership. The Indiana shopping mall is in bankruptcy court.

But the harshest assessment of Thomas, 59, comes from the trustee in a bankruptcy case over a distressed South Side shopping center owned by a Freedom venture. The trustee, Karen Goodman, accuses Thomas of crossing the line into criminal behavior once again. In a lawsuit filed last September, Goodman alleges that Thomas and his partner, Daniel Olswang, acted “with felonious intent,” diverting about $2.8 million away from the property in a way that constituted larceny or embezzlement.

Though a bankruptcy judge recently dismissed the claims alleging criminal wrongdoing, he didn’t rule on their validity, saying only that he had no jurisdiction over matters of criminal law.

Thomas denies he has done anything wrong, saying he was unaware of any transfers alleged in the lawsuit. With a new wife and young son, Thomas says he has rebuilt his life, boasting that he has amassed a real estate and business empire worth $150 million since leaving prison with $20 to his name. If that’s not enough, he also says he’s considering a run for mayor of Chicago.

“You could not pay me to break a law again and go back to prison,” he says.

Yet it’s possible that Goodman’s allegations could resurface. Federal law requires bankruptcy trustees who suspect criminal activity in a case to refer the matter to law enforcement.

It’s unclear if that’s happened.

Goodman declined to comment, as did representatives of U.S. attorney’s office in Chicago and the FBI. Olswang did not respond to a request for comment about the criminal allegations, and an attorney for him and Thomas in the bankruptcy

COSTAR PHOTOS

CLASSIFIEDS

æ`ÛiÀÌ Ã } -iVÌ

The St. Paul, Minn., office building, left, and Sherman Plaza. case said only that the charges had been dismissed.

Thomas already has two convictions on his record. The New Yorker, formerly known as Bernard Barton Jr., pleaded guilty in 2003 to a billboard leasing scam in New York.

With a new name, he agreed to work undercover for federal prosecutors in Chicago, helping them convict Antoin “Tony” Rezko, a close associate of Blagojevich, and former Ald. Isaac “Ike” Carothers.

Thomas’ cooperation allowed him to avoid a trip to prison. In 2010, a judge gave him three years’ probation instead.

But Thomas ran into trouble again in 2014, after a federal grand jury indicted him on charges that he stole more than $370,000 in public funds from a marina development in south suburban Riverdale.

He pleaded guilty, but the case took a bizarre turn after that. Federal prosecutors accused Thomas of submitting a fake dentist’s note so he could leave home detention for a tryst with a mistress. He also used a phony Babe Ruth home run baseball to pay his attorney and faked bipolar disorder to ask for a shorter prison sentence, they charged.

In a May 2015 pre-sentencing document, Thomas admitted the tryst, said the Babe Ruth baseball accusation was irrelevant and said he had bipolar disorder. The prosecutors were unsparing in their 2015 sentencing memorandum to Judge James Zagel.

“John Thomas is a serial con man,” they wrote.

Zagel sentenced Thomas to five years in prison, three more months than prosecutors sought. Thomas was granted supervised release after serving about two years, federal records show.

Even while in prison, Thomas was working on real estate deals.

He and fellow inmate Randal Hansen, a South Dakota hedge fund manager who had been convicted of running a fraudulent investment scheme, agreed to form a real estate investment company and discussed buying a property in Grand Rapids, Mich., according to a lawsuit Hansen and another partner filed against Thomas and Olswang in December 2020. They sued after the plan went sour. In court, Thomas and Olswang have denied wrongdoing and asked a judge to dismiss the case.

Thomas hit the ground running after his release, backed by investors and lenders willing to give him a second chance.

“He won me over during a sixmonth period of time, and here we are today doing multiple projects together and it’s been great,” Jeff Brown, a co-founder of T2 Capital Management, a Wheaton real estate investment firm, told the Minneapolis/St. Paul Business Journal in August 2018. “He’s a humble, thoughtful person. It’s very contrary to what we all read in the newspapers.”

Brown did not return phone calls.

Freedom Development Group’s deals included a 17-story office building in downtown St. Paul that the firm acquired with T2’s backing in 2018 and planned to convert into apartments. But the project stalled, and a lender, Los Angeles-based Westridge Lending REIT, filed a lawsuit against the property in December, alleging that an ownership venture led by Thomas and Olswang defaulted on a $11.7 million mortgage. A receiver has taken over the building

THOMAS’ TIMELINE

Former government informant John Thomas has resumed his real estate career since serving prison time for fraud.

2001: John Thomas (formerly known as Bernard Barton Jr.) is arrested in connection with a billboard fraud scheme in New York.

Connect with Claudia Hippel at claudia.hippel@crain.com for more information.

P024-P025_CCB_20220228.indd 24

2003: Thomas pleads guilty to federal fraud charges, including allegations that he sold outdoor advertising space he didn’t own.

2010: In exchange for his help gathering evidence in federal criminal cases against real estate developer Tony Rezko, a confidant of former Gov. Rod Blagojevich, and Ald. Isaac Carothers, Thomas avoids a prison sentence in the New York case. He instead receives three years’ probation. Thomas provided “extraordinary cooperation” in the two cases, the U.S. attorney’s office says.

2007: Thomas, by now an active real estate investor in Chicago, is revealed as an informant for the federal government in unnamed investigations.

and Th men man mist has Deve sued Coun mish “Th are torne go-b will b Th lems build pects more cred Th tious chain from Ever Marc man He o it clo ating store have Th over the S “I’ thing mark own, buye asset up w asset tion.”

2014: guilty that h $370,0 from a ment i Riverd

2017: a fede Minn., estate ment G

2/25/22 4:03 PM

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 25

es

omas deals. andal edge connt inform pany perty rding other and They ur. In have ed a

nning nvese him

a sixhere projreat,” f T2 eaton told Busi“He’s n. It’s ad in

hone

oup’s office Paul T2’s ed to t the , Los nding t the eging ed by ulted A relding

fraud.

l

ree .

JOHN R. BOEHM

COSTAR PHOTOS

John Thomas

and hired a broker to sell it.

Thomas blames the development’s troubles on a former project manager, Spiro Siavelis, saying his mistake was trusting Siavelis, who has since died. Several Freedom Development Group ventures have sued the Siavelis estate in Cook County Circuit Court, alleging he mishandled multiple projects.

“The allegations of the complaint are fanciful,” says the estate’s attorney, Joseph Marconi of Chicago-based Johnson & Bell. “The case will be strenuously defended.”

Thomas is unfazed by the problems in St. Paul, saying he’s put the building up for sale himself and expects it to fetch about $25 million, more than enough to pay off his creditors.

Thomas also hatched an ambitious plan to start a new grocery chain, Jet Foods—a title taken from the initials of his name, John Everest Thomas. He told Crain’s in March 2021 that he could open as many as 80 stores over two years.

He opened one in Carol Stream, but it closed last September after operating for just six months. Plans for stores in Park Forest and Rockford haven’t panned out.

Thomas acknowledges he got in over his head with Jet Foods and the St. Paul project.

“I’m good at many things; two things I’m really not good at, supermarkets and development on my own,” Thomas says. “I’m a great buyer of assets. I’m a great seller of assets, maybe a person who comes up with an idea what to do with an asset, but really bad at construction.”

2014: Thomas pleads guilty to federal charges that he stole more than $370,000 in public funds from a marina development in south suburban Riverdale.

2015: U.S. District Judge James Zagel sentences Thomas to five years in prison in the Riverdale case, three more months than prosecutors sought.

2017: Thomas is released from a federal prison camp in Duluth, Minn., and launches a new real estate business, Freedom Development Group.

P024-P025_CCB_20220228.indd 25

But he does think he’s got the chops to run for mayor of Chicago.

“I know I could debate,” he says.

“And I bet you I’m the only one who could actually read a budget who would be on a podium to have a debate with me.”

Thomas had more luck in Elgin.

He made a splash in 2019 when a Freedom venture acquired the former Sherman Hospital property in the far northwest suburb for $1 million. In 2020, at the beginning of the coronavirus pandemic, the state decided to reopen the hospital for COVID-19 patients, spending $18 million in federal emergency funding to fix it up.

The state was going to rent the hospital but never followed through with its plans. Instead, it reached a settlement to pay the venture nearly $4 million. Thomas says he split the proceeds with a partner, Chicago real estate investor Gerald Nudo, who received $2.1 million. Thomas says he pocketed $1.8 million.

The Elgin property is on the market, and Thomas says it’s receiving a lot of interest. But a loan document filed in Kane County shows that the property is one of several owned by Freedom ventures covered by a mortgage that’s in default.

The mortgage totals $6.7 million in loans from a Nudo venture to multiple Freedom properties, including the Aurora apartment building.

Thomas says the document was “misfiled.”

Nudo, principal at Chicago-based Marc Realty, did not return phone calls. But Thomas provided a 2019 letter of recommendation from him to a local bank saying Thomas and 2020: Thomas reaches an agreement allowing the state of Illinois to turn the former Sherman Hospital in Elgin, a property controlled by a Thomas-led venture, into a COVID-19 ward. The state never opens the hospital but pays the Thomas venture $4 million as part of a legal settlement.

2021: A bankruptcy trustee accuses Thomas and partner Daniel Olswang of diverting $2.8 million from a South Side center in a way that constituted larceny or embezzlement. The judge in the case dismisses the charges on jurisdictional grounds.

Olswang are “easy to work with and they have extensive knowledge of real estate.”

Thomas also provided a 2019 letter of recommendation from T2’s Brown saying that “each loan (from T2 to Freedom) has been paid as agreed and each joint venture (with Freedom) has performed in line with pro forma.” After being paid out, T2 is no longer involved in any Freedom projects, Thomas says.

Before his sentencing on the New York conviction in 2010, Thomas invested in several downtown Chicago office buildings, including one at 250 S. Wacker Drive, which turned out to be a big success. Asked to discuss his successful recent investments, Thomas says there have been many, but offers only one example in addition to the Elgin property: a 203,000-square-foot office

building at 2400 Cabot Drive in west suburban Lisle. He says he bought it for $2 million and sold it for $4 million.

Thomas provided a contract from February 2019 showing that a venture led by him had agreed to buy the building for $2.6 million from a venture including Chicago-based Walton Street Capital. But DuPage County records provide no evidence that Thomas completed the transaction. A deed filed with the county shows instead that the Walton Street venture sold the property in April 2019 for $2.65 million to another investor.

When pressed further about his involvement with the property, Thomas said only that he “flipped” it. He didn’t respond to further questions seeking clarification.

Freedom also moved into Indiana, buying the struggling 600,000-square-foot Concord Mall in Elkhart in early 2020. But Freedom quickly fell behind on loan payments. With a lender moving to collect on a $7 million foreclosure judgment, the Freedom venture that owns the mall filed for Chapter 11 bankruptcy protection last month, preventing the lender from seizing the property.

Thomas confidently declared the mall is in good shape, with some new leases in the works and a pending eminent domain case that could pay out as much as $4 million. If all else fails, he says he can sell the property for $10 million to $15 million and pay off his creditors.

But Thomas and Olswang could face their greatest legal peril in the Chapter 7 bankruptcy case involving Sherman Plaza, a 65,000-squarefoot shopping center in the Chatham neighborhood on Chicago’s South Side. A venture controlled by them that owns the shopping center filed

COMPANIES ON THE MOVE

for bankruptcy protection in August 2020, four months after a Wisconsin lender, Prescient Capital Partners, filed to foreclose on the property.

The filing blocked Prescient, which is owed $4.3 million, according to court documents, from seizing the shopping center.

Bankruptcy trustee Goodman alleges that Thomas and Olswang have illegally pulled money out of the property—funds that should go to its creditors. They used the property as a “cash cow” to fund other properties and businesses, according to allegations in her suit.

Goodman’s most powerful piece of evidence: In a December 2020 creditors meeting, Olswang admitted that he and Thomas had used money from the Chatham property to try “to keep our other projects going,” according to a transcript of the meeting. Instead of using rent collections to pay its mortgage, “a lot of the rent was used accordingly on the various projects,” Olswang said.

Thomas and Olswang have refused to answer further questions from Goodman, citing their Fifth Amendment privilege against self-incrimination, according to court documents. But U.S. Bankruptcy Judge Donald Cassling on Feb. 4 dismissed the allegations of larceny or embezzlement, saying claims alleging criminal actions are beyond his jurisdiction. He let stand several other civil counts alleging the $2.8 million in transfers were improper. The parties are in “preliminary settlement discussions” over the civil charges, according to a court filing by Goodman.

Pressed several times to explain the transfers, Thomas insists he knew nothing about them.

“If you ask me 55 questions about what happened to that thing, I’d have absolutely no idea,” Thomas says.

ADVERTISING SECTION

To place your listing, visit www.chicagobusiness.com/companymoves or contact Debora Stein at 917.226.5470 / dstein@crain.com LAUNCHES, PARTNERSHIPS & BUSINESS LINES

MERGERS & ACQUISITIONS

MERGERS & ACQUISITIONS

Liz Nicholson & Associates Chicago, IL 312-622-6678 www.nicholsonandassoc.com

Chicagoland Equipment & Supply Chicago, IL 773-533-3333 www.cesnationwide.com

TranSystems Chicago, IL 312-669-9601 www.transystems.com

Liz Nicholson and Associates, a boutique firm specializing in political fundraising, is proud to announce it’s expansion into strategic consulting services for both campaigns and nonprofits. Owner Liz Nicholson, widely regarded as one of the top political fundraisers in Illinois, opened her firm in 2019 and recruited campaign professionals to meet the needs of high-profile clients including the Biden SuperPac, IL General Assembly and City Council leaders & numerous elected officials.

Chicagoland Equipment & Supply (CES), a leading supplier of equipment, supplies and service to the food industry, is proud to announce the January 2022 acquisition of United Fast Food & Beverage Service, a leading supplier of equipment and service to convenience stores and fast-food restaurants. The acquisition represents an exciting new phase of growth for CES, allowing for an expanded service network throughout the upper Midwest and full line of equipment and products.

TranSystems Corp., a national transportation consulting firm that provides engineering, architectural, planning and construction solutions, acquires OMEGA & Associates, Inc., an industry-leading engineering firm providing consulting services throughout the greater Chicago area. OMEGA’s 80-person infrastructure team will join TranSystems national 900-person workforce.

“Our combined exemplary reputations in Chicago create a powerful team,” said Chandra Prasad, CEO of OMEGA & Associates, Inc.

In order to meet the growing needs of current and prospective clients, Nicholson teamed up with seasoned event & production professional Laurie Dimakos to expand LNA’S suite of services to offer strategic, long-term solutions to an extensive client roster.

2/25/22 4:03 PM

26 FEBRUARY 28, 2022 • CRAIN’S CHICAGO BUSINESS

New Salt Shed concert venue will help strengthen Chicago’s independent live music scene SALT SHED from Page 3 outdoor shows featuring headliners including Jason Isbell, Fleet Foxes, and Sharon Van Etten with Angel Olsen—musicians who can pack venues bigger than the company’s current largest spot, the approximately 900-capacity Thalia Hall.

Aiming to open its indoor spaces in 2023, the project has been years in the making, but relatively quietly, and the recent announcement of concert dates, with tickets that went on sale Feb. 15, sent jolts through the Chicago live music community.

“The Salt Shed folks have a long, respected track record here in Chicago. So it’s really exciting news,” said Billy Helmkamp, a club owner (Sleeping Village, The Whistler) and co-chair of the Chicago Independent Venue League, a music club consortium of which 16” on Center—the company that will run The Salt Shed—is a member.

The big new venue also amounts to a shot across the bow of music venues planned for the massive and controversial Lincoln Yards development, scheduled to break ground on its entertainment offering later this year, just to the north along the river, as well as to the current leading outdoor venue in the city, the larger Huntington Bank Pavilion at Northerly Island, controlled by international music conglomerate Live Nation.

“It seems like they’ve beaten (Lincoln Yards developer) Sterling Bay to the punch with the entertainment complex there,” said Helmkamp.

Development might cost as much as $50 million, according to a June 2021 Chicago Department of Planning & Development release on the project. Bruce Finkelman, principal of 16” on Center, declined to comment. A recent visit to the site showed the roof of the existing shed in the 1300 block of North Elston Avenue half-open and plenty of work to be done to host shows in August. The developers, R2 Companies and Blue Star Properties, bought the property in 2018 for $15 million.

The Chicago Independent Venue League was formed in reaction to Sterling Bay’s initial plans to let Live Nation control up to five music venues in Lincoln Yards, which will eventually populate the North Branch with $6 billion worth of parks and apartment, office and entertainment buildings. So it’s significant that one of its members is loading up on live music and associated entertainment nearby. “It’s right in the backyard of that Lincoln Yards project,” said Greg Kot, longtime local rock critic and co-host of the “Sound Opinions” rock-and-roll talk show on public radio.

But Finkelman brushed aside

talk of Lincoln Yards or any budding entertainment empire as a motivator.

Finkelman says that he and 16” on Center partner Craig Golden— incidentally, one of the founders of Sterling Bay who is no longer involved with the firm—were “most excited” about finding historical space that can be readapted to contemporary and community use, Finkelman said. The Morton facility last year won landmark status from the city. And Finkelman and Golden’s 2014 restoration of Thalia Hall in Chicago’s Pilsen neighborhood—a second-floor, late 19th-century theater modeled after a European opera house—has been acclaimed by preservationists and concertgoers.

In making his nightly rounds from Thalia to Empty Bottle and up to SPACE, Finkelman said, the Morton building kept speaking to him.

And after the salt company last decade decided to abandon the facility where it once processed 150,000 tons of salt annually, “we wanted to see what was inside. And it became, wouldn’t it be cool if we could do something with it?” he said.

In addition to the four-season music venue that will be developed under the Morton Salt roof, the site will have an outdoor venue—official capacities are still to be worked out with the city, but it will be larger than Thalia Hall—and restau-

rants and a makers’ market amidst Goudie—numbers large enough to the existing office and packaging rival venues from Thalia Hall, Chibuildings on the site. There are pro- cago Theatre and the Riviera.

But after a public outcry led by visions being made for significant parking in the area, too, Finkelman the Chicago Independent Venue League, it’s now unclear who will said.

Despite its other ambitions, the run the Lincoln Yards clubs when project will surely have the most the Steelyard complex opens in impact on the concert scene here, two years. Sterling Bay backed helping affirm Chicago’s status as a away from the Live Nation partcity where live music remains rela- nership, and the company is “actively independent. In other cities, tively soliciting inquiries from all Live Nation has been able to buy venue owners who are interested up or develop venues and essen- in learning about potential leastially take control of the local music ing opportunities,” said Goudie.

As for The Salt Shed, “I think we scene, industry observers said.

Finkelman’s operation is not as kind of see it as a rising tide lifts all big here as Jam Productions, said ships,” she said. “It’s bringing acKot, “but as far as indie promoters tivity and foot traffic to the North in the city go, he’s pretty big. Be- Branch. I think our two districts will tween him and Jam, there’s a huge independent pres- “I THINK WE KIND OF SEE IT AS A ence still in Chicago, despite the Live Nation ogre.” RISING TIDE LIFTS ALL SHIPS.” Jam Productions, the largest music promoter Julie Goudie, spokeswoman for Sterling Bay in town, runs Riviera Theatre, The Vic and Park West on complement each other.”

Similarly, The Salt Shed seems the North Side and books shows at other venues as well. Its execu- like a solid bet to augment the city’s tives declined to comment for this music scene.

Finkelman “has got a nationstory.

Sterling Bay’s Lincoln Yards proj- wide reputation as a good booker ect will break ground this year on (of acts). And the venues are firstdevelopment of its south parcel to rate,” said Kot. “So this sounds like include the Steelyard entertain- he’s taking the next step up. And ment complex, with music venues it’s cool he’s able to roll out some of roughly 1,000 and 3,500 seats, name artists right away. That’s according to spokeswoman Julie pretty impressive.”

NOMINATE A COLLEAGUE TODAY! 2022

EXECUTIVES OF COLOR IN CONSTRUCTION AND COMMERCIAL REAL ESTATE

Crain’s 2022 Notable Executives of Color in Construction and Commercial Real Estate will recognize top minority leaders in the fields of construction and commercial real estate.

2022

EXECUTIVES OF COLOR IN MANUFACTURING

Crain’s 2022 Notable Executives of Color in Manufacturing will recognize top minority executives in manufacturing for their success and accomplishments during the last 18 months.

Nominate at ChicagoBusiness.com/Notables

P026_CCB_20220228.indd 26

2/25/22 3:54 PM

CRAIN’S CHICAGO BUSINESS • FEBRUARY 28, 2022 27

This elegant condo is 24 stories above Michigan Avenue Designed by one of its two owners, the two-bedroom unit at the Ritz-Carlton Residences is priced at $1.6 million

BY DENNIS RODKIN

HOW TO CONTACT CRAIN’S CHICAGO BUSINESS EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5200 CUSTOMER SERVICE. . . . . . . . . . . . . . . . . . 877-812-1590 ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5492

P027_CCB_20220228.indd 27

CLASSIFIED . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-659-0076 REPRINTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212-210-0707 editor@chicagobusiness.com

PHOTOS BY POSITIVE IMAGE PHOTOGRAPHY

The glittering nighttime view from this condominium up Michigan Avenue to Oak Street Beach “takes my breath away,” says Anthony Mauro, and he wanted the same for the interiors he designed for the condo, for himself and his partner, Dan Rea. When they bought the unit on the 24th floor of the Ritz-Carlton Residences at Michigan Avenue and Erie Street in 2016, Mauro used it as his first serious foray into interior design. His goal was to “give each space its moment,” such as in the living room, where a tall marble fireplace wall is strong enough to stand up with all the lights outside and the crowns of the Allerton Hotel and Palmolive buildings.

Mauro created moments in other parts of the 1,920-square-foot two-bedroom condo, with, among other things, a black-and-white foyer, an oversized chandelier in the dining room, and a bathtub surround of shiny silver tile.

Now planning a move to London, the couple is asking $1.6 million for the condo. Represented by Compass agent Kathleen Malone, it came on the market Feb. 15.

Vol. 45, No. 9 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the first week of July and the last week of December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.

2/25/22 2:54 PM

tab doc.indd 1

22cb0058.pdf

RunDate 2/28/22

FULL PAGE

Color: 4/C

2/17/22 5:36 PM